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Center for Responsible Lending: Think About Alternatives to Payday Loans, Cash Advances

Filed under: Advice — Paul Rizzo at 10:52 am on Tuesday, October 31, 2006

Considering the possible debt trap payday advance clients often face as a result of these resources, the Center for Responsible Lending wishes to ensure that readers are aware of alternatives.

Here’s a list of ways to receive quick cash that does not include any sort of bad credit payday loans:

Payment Plan with Creditors
The best alternative to fast cash loans is for consumers to deal directly with their debt. Many creditors will negotiate partial payments if a plan is in place. Working out a payment plan with creditors can allow the consumer to adjust billing to pay off bills over a longer period of time.

Advances from Employers

Some employers grant paycheck advances to employees. Because this is a true advance, and not a loan, there is no interest and the advance is therefore cheaper than any online cash advance.


Consumer Credit Counseling
There are various consumer credit counseling agencies throughout the country that can help consumers work out a debt repayment plan with creditors or develop a budget. These services are available at little or no cost.

Emergency Assistance Programs
Many faith-based groups and community organizations provide emergency assistance, either directly or through social services programs. For example, in partnership with state agencies, the federal Low Income Home Energy Assistance Program provides financial assistance to low-income households that are in a heating or cooling (weather) related emergency.

Credit Union Loans
Many credit unions offer small, short-term loans to their members. For example, North Carolina State Employees’ Credit Union offers members a salary advance loan at 11.75% annual interest - 30 times cheaper than a typical payday loan. Some credit unions also offer free financial counseling and a savings plan to help members get back on their feet.

Cash Advances on Credit Cards

Credit card cash advances, which are offered at about 30% APR, are much cheaper than getting a payday loan. Some credit card companies specialize in consumers with financial problems or poor credit histories.

Secured credit cards are another option. A secured credit card is tied to a savings account. The funds on the account ’secure’ the amounts charged on the card. Once a consumer has successfully used the secured card for a period of time, they can then qualify for a regular unsecured credit card.

Military Loans
Several companies offer loans ranging from $500 to $10,000 to active duty and retired military personnel. Payday loans are 10 to 13 times more expensive than these small consumer loans. These loans cost less than payday loans because they have much lower APR, ranging from 33% to 34.99%.

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