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Payday Freedom?

Posted by Mike on June 14th, 2009

I received a flier with my bank statement.  In it was an article announcing “Payday Freedom, The Alternative to Payday Loans.” I have noticed these payday loan operations popping up all over during the last five years or so.  I have even seen them in fairly affluent neighborhoods.  What started as a somewhat-shady, at the very least opportunistic, business is now legitimized by a credit union. Here are the “benefits” this “service” provides for the credit union’s members:

  • No Credit Check
  • LOW Fee – Only $12 per $100 Borrowed
  • LOW Rate – Only 18% APR
  • 30 Day Payment Period

Have we not learned from the recent financial trouble our nation is going through? It is hard for me to imagine how this can be a good deal for anyone!

  • No Credit Check – The folks who need a payday loan are probably poor credit risks. Do you want that for you credit union?
  • LOW Fee – Only $12 per $100 Borrowed – That’s 144% annually when compounded monthly!
  • LOW Rate – Only 18% APR – Yes, this might be a low rate when compared to credit cards and payday loan outfits. I like 0% better when you don’t take out a loan.
  • 30 Day Payment Period – I wonder what happens after 30 days?

This doesn’t seem to be a good idea for banks to promote.  What about teaching people to be financially responsible?  I guess you can’t get that from this credit union!  I suggest Dave Ramsey.

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