A Payday Alternative in PA

We all know how toxic payday loans are, so it’s great to see other people talking about the need to ban them once and for all and provide fair alternatives.

This article and accompanying clip, citing AFFIL, not only explains the terrible impact of payday lending on vulnerable consumers, but also identifies an alternative available to consumers in Pennsylvania.  In 2006, the state’s Treasurer and the Pennsylvania Credit Union Association collaborated to create the Credit Union Better Choice program.

For once, here’s a deal that seems too good to be true but is actually on the side of consumers.  As state Treasurer Rob McCord explains:

“A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or approximately $450 over 90 days.  A $500 Credit Union Better Choice loan costs consumers approximately $42.50 for the same 90 days.”

That means that consumers have access to loans with a 34% interest rate, instead of just ones that charge 391%, and they receive a three-month loan instead of one that is due in just two weeks.

Others are also taking notice of the scourge of payday lending.  Just today, the New York Times editorialized against this legalized loan sharking and the need for a national usury cap.  The alternative?  “Payday lenders may actually be helping to drive working-class people into the ranks of the poor.”