Bottom Line: Better alternatives to payday loans
MEMPHIS, Tenn. (WMC/CONSUMER REPORTS) - If you’re struggling to pay your bills, you might be considering a payday loan. But be careful! Even with some recent reforms, many of these loans still come with hefty fees and very high-interest rates. The good news is that there are alternatives, and as Consumer Reports explains, you just have to know where to look.
The pandemic really exacerbated the problems with payday lenders, especially for people in low-income and Black communities. So there has been a push to bring better and fairer banking services to them.
What can you do right now if you’re in need of emergency money fast? First, look for a Community Development Financial Institution near you. They’re financial service providers, like a bank or credit union, whose mission is to bring financial services to low-income communities, places that many traditional banks have largely excluded.
And joining a CDFI can be affordable. They offer banking services at no or low cost with an initial deposit as small as $25.
Another avenue you can go is to find a nonprofit with a payment relief program. For example, Exodus Lending is a nonprofit dedicated to helping people get out of payday loan debt. These groups consolidate your loans for no fee and 0 percent interest.
If you do end up going to a payday lender, CR says it’s important that you know the laws in your state. USA.gov has a directory of State Consumer Protection Offices, where you can get help if you have a problem with a lender.
“Consumer Reports TV News” is published by Consumer Reports. Consumer Reports is a not-for-profit organization that does not accept advertising and does not have any commercial relationship with any advertiser or sponsor on this site
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