Wayne told me about an NPR story about credit unions getting into the payday loan alternative business. My only comment is: Why didn’t they do this sooner?
If one looks at the history of credit unions, it is clear that most early credit union loans provided exactly the sort of quick cash that payday loans do today. (My ancestors relied on credit union loans to finance vacations.) As credit scoring replaced personal networks as the means of enforcing debt repayment for credit unions, credit unions developed business practices that made them far more similar to banks. This new trend represents a welcome and positive return to the roots of the credit union movement.
RSS Updates 
RSS E-Mail Updates 
Twitter 
Facebook 
CEI.org 
WorkPlaceChoice.org 
GlobalWarming.org 
CEI On Demand Video 
Liberty Week Podcast 
{ 8 comments }
If credit unions can offer effective loan rates better than the payday places, it's great for poor folk. The payday loan places with all the fees charge hundreds of percent yearly, it's nutso.
Stephen, you think Credit Unions wont charge a high fee? Anytime you take out a small loan for a short period….the APR will look high. This is a needed service, but if Credit Unions can do it cheaper then great. I uspect it help sthat they dont have to pay taxes like the rest of us?
I agree with the previous writer, Jeff, that it is unlikely credit unions can offer a payday loan product at a lower rate than payday loan stores (without losing money). A credit union in Washington State tried to offer a payday loan product for their members with the goal of simply breaking even and had to cancel the program after finding they were in the red. There is a misconception regarding the rates charged for payday loans that the public needs to be aware of. If you calculate the APR on a $100 payday loan with a $15 fee, it equates to 365%. Similarly, the APR on a $100 credit card balance with a $27 late payment fee is 657%. Don't underestimate the financial choices of payday loan customers, they are often making the best financial decision for themselves.
America is a free market system. (At least it is supposed to be) If the Payday Loan service could be offered at a cheaper rate than these stores currently charge, someone would be doing it. The truth is that there have been some that have tried and have quickly found out that it is necessary to charge rates similar to the rates being charged by the Payday Loan industry. As someone has already commented, a credit union in Washington tried to offer the service with a goal to just break even and even at a rate that figured out to 365% they had to cancel the program because they could not break even at that rate. The problem is that everyone wants to attach an APR to the service and you just can’t do that. What would the APR be on a $34 bank overdraft fee when you are $10 overdrawn and you cover the $10 and pay the $34 fee the next day? That would work out to an APR of many thousands! Or the APR on a late fee on your credit card? If you insist on attaching an APR to everything, there would be businesses guilty of charging a much higher APR than the Payday Loan industry.
The improper use of payday loans can lead to mortgage crisis that is why one of the biggest targets for politicians, as far as economics are concerned, is becoming the payday loan industry. Governors across the country are trying to rid their states of the industry altogether, and so far, Georgia, North Carolina, and Oregon have succeeded. The result was that bankruptcies, foreclosures, and also the number of overdraft fees due to bouncing checks went through the roof, which doesn’t do anything for the citizens afflicted in these turbulent times, and only is really good for the banking industry. Despite these negative effects, other states are looking to follow the example and do the same. Even at the national level, presidential candidate Barack Obama, is weighing in his own agenda on the issue, and advancing his own intentions on getting rid of the industry in the United States completely. If these measures, both on state levels and nationally, are successful, the results are going to be increased unemployment, more debt, more foreclosures, and an even worse economy.
Vice Presidential hopeful, Alaska Governor Sarah Palin, has been getting more of a bad rap from the mainstream media, than she has in praises. Last weekend, for example, she made her late-night entertainment debut on NBC’s long-running pop culture mainstay, Saturday Night Live. Instead of praising her for the good sport she was, or noting that her appearance gave SNL its highest ratings in 14 years, she has been highly criticized by the press for her appearance. For several weeks now, jab after jab has been taken at Palin, bashing her on everything from questioning her performance as the Governor of Alaska, her seventeen-year old daughter who got pregnant out of wedlock, and even sleazy attacks on her character. Some in the media, including many liberal pundits, have stooped so low as to insinuate that our country would fall to shambles if Palin was forced to take over the office of Presidency if something should happen to Republican Presidential Candidate John McCain. Contrary to the popular belief, virtually all of these attacks are chock full of half-truths, low-blowing character attacks and outright lies. Furthermore, a large number of people admire Sarah Palin for her relentless efforts to better things in her home state of Alaska. Others point to her unwavering support of the disabled demographic, her work in the interests of children and people with special needs and widely misunderstood ailments such as autism and Down syndrome; many of which never have gotten the attention they deserve. Many more put their faith in Sarah Palin, considering her advocacy for personal responsibility and financial freedom. Much of this even includes her opposing to do away with cash advances, a legitimate and invaluable resource that lots of real, responsible, working people have relied on to get out of dire straits once and for all. Post Courtesy of Personal Money StoreProfessional Blogging TeamFeed Back: 1-866-641-3406Home: http://personalmoneystore.com/NoFaxPaydayLoans……Blog: http://personalmoneystore.com/moneyblog/
The Philadelphia Phillies have won their first World Series in 28 years. The last time they climbed to the top of the mountain (1980), Mike Schmidt, Pete Rose and Steve Carlton showed the American League the meaning of spirited, winning baseball. Today, as emotions run high and the city of Philadelphia gears up for celebration of their boys bringing home the Commissioner’s Trophy, pillars of the community like Temple University are preparing for mass rioting. According to Dean of Students Ainsley Carry, “Students involved in vandalism, refusal to disperse, destruction of property, etc. will face both criminal and University disciplinary action. Sanctions may range from fines up to and including immediate suspension. Surveillance – including videotaping – is heightened during the Series on campus and throughout the city.â€
I’m all for personal responsibility, which includes showing respect for others and their property. But is the feel of a police state crackdown necessary? Wait, this is Philadelphia, the “City of Brotherly Love.†Of course it’s necessary.
If you do happen to be ready to riot, take it down about 10 notches first. Be happy, but be respectful. If you find your windshield smashed by someone less respectful of property than you are – and you need some help to take care of that before you’re paid again, affordable personal loans are available at the click of a mouse. That is, if it still works after wild sprayings of liquid refreshments.
Post Courtesy of Personal Money Store
Professional Blogging Team
Feed Back: 1-866-641-3406
Home: http://personalmoneystore.com/NoFaxPaydayLoans….
Blog: http://personalmoneystore.com/moneyblog/
Payday loan is an example of what we call financial options. However, some politicians pursue the elimination of payday loan industry. I don’t think this is a good idea because as a consumer who actually uses payday loan, I don’t have any complain at all using my payday loan. In fact, payday loans helps me in times of emergency that concern about money. If a person don’t want to be trapped in debt he/she must be wise on how to spend his money and choose the best payday loan company that he could trust.
Comments on this entry are closed.