The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Friends Don’t Let Friends Go To Payday Lenders

On August 25th, 2008, posted in: Uncategorized by

The cost of a payday loan is somewhere around 400% annual percentage rate.  OUCH!  Supply and demand is in favor of the payday lender because the consumer has an immediate need.  As a result, they stick it to the consumer.  There tends to be minimum regulation on these types of lenders, and when an unsuspecting consumer needs a “quick fix” to their personal finances…boom…you are now beholden to a very expensive short-term solution.

Imagine if gasoline for your car worked like this.  If your tank is over 1/8 full, there would be a price of $3.50 per gallon (using today’s cost) to fill up.  But if your tank was on fumes and the needle on the gas gauge was buried below 1/8 full, you would have to go to a special pump where there was a 400% increase.  So you would pay $14 per gallon.  HOLY COW!!!  Your need for gas wouldn’t allow you much room for negotiation.  After all, you’re on empty and you can’t move forward.  My guess is that would only happen once, and you would make a strong mental note to never again let your tank get that low.

You should never let your finances get that low either.  No more “quick fixes” should be your personal goal.  Have an emergency fund.  Save for a “rainy day.”  Pay yourself first.  Stop spending money you don’t have.  Have a plan.  Create a budget.  Be smart and borrow smart.  Who can afford a 400% payback on anything?

Our Dellwood facility has been open now for a little over a month.  Our location is surrounded by payday lenders.  We say that our new branch site is located in the “belly of the beast.”   We are working hard to get people to change their direction and walk in our office to learn about a much better solution.  In the first month of operations, we opened up 71 new accounts.  That’s 71 people who are making a choice to put money back in their own pocket – not the payday lenders.  Please tell everyone you know.

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