Home Blog Page 9

Opinion: In defense of Bob Ziel | Guest column

My policy over the past year has been to avoid political discussions as much as possible, in favor of experiences that I have had and which have elicited several favorable comments. However, Bob Ziel and I have an unsigned agreement to keep tabs on each other. First of all, Bob’s assessment of critical race theory as reverse racism is correct. It is an attempt, with roots going back to the last century, to pit people of different origins against each other.

Evan Tibbott

But it has a deeper agenda in some, at least, that reflects a desire to focus and indoctrinate the younger generations with the idea that everything they’ve been taught about America is hypocrisy. That Americans of white (European) descent should be ashamed of their heritage. It is an insult to a significant part of this country, and it is wearing itself out for a lot. It also fails to recognize the supreme sacrifice countless thousands of white American men made during the Civil War to end the heinous period of slavery. This nation has made tremendous strides in overcoming this period in our history, especially with civil rights law.

Some try to use this hypocritically to foster a false sense of genuine concern for human welfare when their efforts are nothing more than an often disguised attempt to lead the nation toward socialism. Which, in its history in the nations where it has gained ground, has resulted in the loss of liberty, property rights and all the rights and freedoms given by God that we have inherited from the Constitution. As former President John F. Kennedy said, “Ask not what your country can do for you, but what you can do for your country.

Fortunately Idaho has avoided much of this new threat that started at some of our universities, has spread to corporate boards and now even to our military, and has now manifested itself in the suppression of the freedom of expression which does not respect the accepted directives of the company Justice.

Wells Fargo account closures highlight vague cost of a credit coup


This month, Wells Fargo (WFC) announced the closure of personal lines of credit, a loan product that consumers could use to consolidate debt, pay unexpected expenses, or even use as a safety net for overdrafts.

The decision came after an early 2020 review of its business, where the bank found that personal lines of credit were not as popular as loans, and only 40% of account holders had balances, said. a bank spokesperson at Yahoo Finance. (The main difference between a personal line of credit and a credit card is that a line of credit may have a higher credit limit than a credit card, making it more suitable for large purchases; lines of credit usually have a lower APR than lines of credit. A credit card.)

The news has left a bad taste in the mouths of some consumers, mainly because reports have emerged of the impact of the closure on customer credit scores.

The San Francisco-based bank waited until the worst of the pandemic had passed before moving forward with its decision to ditch personal lines of credit (given that its image was previously tarnished by the fake accounts scandal of 2017. Wells was undoubtedly more careful to do anything that appeared hostile to customers).

In March, Wells Fargo began phasing out product withdrawal with a pilot program. After a 60-day, 30-day, and final notice period, feedback on the changes has been “better than expected,” a Wells Fargo spokesperson said.

But when the bank publicly unveiled the decision this week, a line in the FAQ section of the ad resulted in an overhaul of the struggling bank’s past with the open / closed account section, and some were not happy, including Senator Elizabeth Warren, a frequent critic of Wells Fargo. The bank said the closure “could” have an impact on a customer’s credit rating, but would not be considered derogatory on a credit report.

A FICO credit score is based on a combination of factors: 30% of amounts owed, 35% payment history, 10% new credit, 15% length of credit history, and 10% credit combination. With the closure of an account by Wells Fargo, there is a good chance it will have an effect on people’s scores given the above factors, although the bank has claimed it does not “determine or know “the factors that make up a credit score.

How much does 10 points cost? A lot or a little.

Wells Fargo did not say how many customers are using these accounts, but said the variable interest rate on the loans would be locked in at a reasonable rate, and then minimum payments would be required to pay off the rest. Other loan products are available if customers need more money, even if they have to reapply.

This leaves consumers with potential damage to their credit scores. There is no specific number of points associated with closing an account, but the TransUnion credit bureau notes that it may be significant enough to warrant keeping the old lines open or at least thinking about what. we must close.

A woman walks past a personal finance loan office on Thursday, October 1, 2020 in Franklin, Tennessee (AP Photo / Mark Humphrey)

The fake account scandal probably also led to salty credit, as consumers who found open credit card accounts subsequently decided to shut them down. But as then, it is difficult to quantify the monetary damage.

The bank said it did not plan to compensate customers for the potential damage to the credit score. It would be difficult, as a person’s unique circumstances have an incredibly varied impact.

As Bankrate notes, threshold-based methods for deciding who is eligible for which loans at what interest rates can matter. Based on its 2015 data, a mortgage of $ 300,000 for a person with a credit score of 680 would pay 3.709% for a 30-year fixed mortgage, while a borrower with a score of 639 would pay 4.899%. . The difference between these 41 points would result in an expense of $ 2,520 per year. (If this loan were made with a 20% down payment, a 21-point credit score gap would have a similar difference, according to Fannie Mae’s data on price adjustments.)

Of course, credit scores only affect a consumer’s costs if they borrow money, as well as the amount. So while the credit scores of 100 people can be affected, it can be in 100 different ways.

San Francisco California, United States - August 6, 2020: Wells Fargo Headquarters and Museum located at 420 Montgomery Street in San Francisco, CA.

San Francisco California, United States – August 6, 2020: Wells Fargo Headquarters and Museum located at 420 Montgomery Street in San Francisco, CA.

Knowing exactly how many points could result from a closed account is, again, unclear. When applying for a credit card, five or 10 points may come off, only to return a few months later, as the number of credit applications in a given period, which affects scores, changes.

Another problem for customers who have used their lines of credit is that they will have to re-apply for more loans.

If Wells Fargo’s closure of its previous account has an effect on its credit rating and credit report, do these changes in a person’s credit history affect the interest rate on new products? If this were the case, closing these accounts would result in increased interest income for the bank.

A spokesperson for the bank declined to answer whether or how closing the account would factor into the interest rate on a new loan via the credit score.

Ethan Wolff Mann is a writer at Yahoo Finance who focuses on consumer issues, personal finance, retail, airlines, and more. Follow him on twitter @ewolffmann.

Read more:

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, Youtube, and reddit

What Happens When You Maximize A Credit Card?


We want to help you make better informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and earn us a referral commission. For more information, see How we make money.

If you regularly use your credit card without making your payments in full, interest accumulates. Ultimately, you can even maximize your credit card. When you reach your credit limit, it has several immediate and long-term consequences on your financial health.

“Maximizing your credit cards can hurt your financial potential,” says mason Miranda, credit industry specialist at Credit Card Insider, a credit card review site.

Here’s what you can expect if you’re using your credit card to the max – and how to get back on track.

What does it mean to maximize a credit card?

Each credit card user is assigned a credit limit, which is the maximum amount they can access. If you reach your credit limit, you have depleted your credit card and can no longer charge your card for purchases.

The maximum of a credit card can happen in a number of ways. You can have a low available line of credit combined with an unexpected expense that causes you to quickly hit your credit limit. Or, you may have a habit of spending more than you can afford when your bill comes due each month, which can cause you to build up a large balance. Finally, you might be struggling to get by and use your credit card as a lifeline.

“At some point you have to figure out why this happened and then you have to make a plan,” says Beverly harzog, credit card expert and consumer finance analyst for US News and World Report.

What Happens When You Reach Your Maximum Credit?

Maximizing your credit card has consequences for your finances and your credit score, some immediate and others long term. These include:

  • You will be refused if you try to use the card. When your card limit is exceeded, the first consequence is that you will no longer be able to charge anything. Your card will be refused if you try.
  • Interest will accumulate. Unless you have a 0% introductory APR card, you will have to pay interest charges if you cannot pay your card in full by the time the bill is due. “If you’re using a credit card to the max and you’re not able to pay it off quickly, you’re likely going to be spending a lot of extra money on monthly payments because of the interest. This can seriously affect your ability to afford other necessities, ”says Miranda.
  • You may incur additional charges. Depending on your issuer and the terms of your card contract, you may have to pay additional fees if you go over your limit, says Miranda.
  • Your credit score will take a hit. One card at maximum can affect your credit score in a number of ways. Firstly, it will result in a higher credit utilization rate – that is, the amount of credit you use compared to the amount of credit you have on all of your cards. This is one of the most important factors that contribute to your credit score, right after your payment history. And if you are unable to pay your credit card bill, it will hurt your credit score even more. “When you reach the point where you’ve exhausted your credit card, you’re not in good financial shape,” says Harzog. “This signals to a credit card issuer that you may be having financial difficulty and suddenly you might seem risky. ”

Can you increase your credit limit?

One way to avoid maxing out your credit card is to spend less on that card. But sometimes, even if you don’t overuse your card, you can regularly find yourself hitting your credit limit because your line of credit is low. In this case, getting an increase in the line of credit might be the best solution. Here are two ways to do it.

Try asking your credit card issuer directly

If you regularly use your credit card to the max, but can afford to pay off the balance, you can try contacting your credit card issuer to request an increase in your credit limit. If you have a solid payment history at this point and a healthy credit history, they’re likely to agree.

Pro tip

You can ask your credit card issuer to increase your credit limit, which will lower your credit utilization rate.

This strategy could actually help increase your credit score. “One of the best ways to increase your score is to request a credit line increase and not use it,” says Tori Dunlap, Founder of His first $ 100,000 and host of the Feminist Financial Podcast.

But if your card is already at or even over your credit limit due to fees and interest, you might have a harder time here.

“If you have a max credit card, they probably won’t give you a raise unless you have a good reason,” says Harzog. For example, if you made a large and necessary purchase, like a major appliance, and you plan to pay it off the following month, your credit card issuer might agree to give you a higher limit, especially if you have a strong payment history.

Consider applying for a new line of credit elsewhere

Another way to increase your overall credit limit is to apply for a new card. However, keep in mind that you are unlikely to be approved if you are using the majority of your available credit on cards you already own. Your credit utilization rate is 30% of your FICO score. “The gold standard for your credit utilization rate is less than 30%. But if you really want to score well… you want to keep your usage below 10%, ”suggests Harzog.

To keep your usage rate low, always pay off the full statement balance each month, says Miranda. “If you’re using a lot of your credit limit, consider making payments throughout the month to reduce your statement balance for that billing period. “

Can you still use your card?

Once you’ve reached your credit limit, your credit card will likely be declined. Some issuers may allow you to exceed your limit up to a certain point. If you have purchased over limit protection, you may be able to continue using your card, but you may be charged a higher fee or interest rate. These fees cannot exceed $ 25 for your first over-limit fee, depending on the Consumer Financial Protection Bureau.

However, Harzog does not recommend taking out over limit protection. When you’ve exhausted your credit card, you need to focus on paying off your debt. This means that you should immediately stop using your card and develop a repayment plan. “If you place purchases on a credit card that you can’t pay on time and in full, you don’t want to use a credit card at all,” says Dunlap. You should also work on building an emergency fund so that you don’t have to resort to a credit card in an emergency.

Is It Wrong to Maximize Your Credit Card?

Maximizing a credit card can have serious financial consequences, especially if it’s your only card. This is because you will have a 100% credit utilization rate for this card, which will likely hurt your credit score and make you appear risky in the eyes of lenders. “Lower credit scores can result in higher interest rates on future loans, such as auto loans and mortgages, which means more money out of your pocket,” says Miranda.

How to pay off a maximum credit card

If you’ve already used your credit card to the fullest, there are steps you can take to repair your credit score and manage your debt. Here are some ways to get your finances back on track:

  • Make a plan. Dunlap says the first step after you run out of credit card is to review purchases and make sure nothing is fraudulent. After that, you should make a plan to pay off the debt. If you get to the point where you aren’t able to make your payments, you should call your credit card company and ask to be put on a hardship plan, according to Harzog. And you can always contact the National Foundation for Credit Counseling for a free one-hour credit counseling session.
  • Consider a balance transfer. Once you’ve paid off some of your balance and your credit score starts to rise, think about your eligibility for a credit card with balance transfer. For a one-time transfer fee that will be a percentage of your balance, you can transfer your balance to a card with an introductory APR of 0%. It can help you save money on interest. However, Dunlap cautions that you will need a concrete repayment plan if you do a balance transfer, as you will still need to pay interest after the introductory period is over. “A lot of people end up using this as a band-aid solution,” she says.
  • Examine personal loans. Finally, consider taking out a debt consolidation loan from a credit union, bank, or online lender. This is a personal loan issued at a fixed interest rate that you can use to pay off higher interest debt like credit cards. This would leave you with a loan to repay instead. Just make sure the interest rate you are getting is low enough to save money.

More states are pushing back interest rate caps on payday loans


By Annie Millerbernd | NerdWallet

Small, short-term lenders, who are not subject to a maximum federal interest rate, can charge borrowers rates of 400% or more for their loans.

But more states are bringing in that number by setting rate caps to curb high-interest lending. Currently, 18 states and Washington, DC, have laws that limit short-term lending rates to 36% or less, according to the Center for Responsible Lending. Other states are considering similar legislation.

“This legislative session, we’ve seen increased and renewed interest in limiting interest rates and limiting the harms of payday loans,” said Lisa Stifler, director of state policy for the CRL.

Opponents of rate caps say that when a state caps interest, lenders can no longer operate profitably and consumers with already limited options lose their last resort. Consumer advocates say the caps free borrowers from predatory lending models.

Here’s what happens when a state’s interest rates protect and what the consumer consequences are for small-dollar loans.

Legislation targets RPA

To deter high-interest lenders and protect consumers from predatory lending, the legislation targets the somewhat complex and decidedly unsexy annual percentage rate.

The APR is an interest rate plus the fees charged by the lender. A $300 loan paid off in two weeks with a $45 fee would have an APR of 391%. The same loan with an APR reduced to 36% would have a fee of around $4.25 – and much less revenue for the lender.

APR is not an appropriate way to visualize the cost of a small loan, says Andrew Duke, executive director of the Alliance of Online Lenders, which represents online short-term lenders.

“The number ends up looking much higher and more dramatic than what the consumer perceives to be the cost of the loan,” he says.

Duke says consumers should instead use actual fees to gauge a loan’s affordability.

But what the tax doesn’t show is the costly, long-term debt cycle many borrowers find themselves in, Stifler said.

More than 80% of payday loans are taken out within two weeks of paying off a previous payday loan, according to the Consumer Financial Protection Bureau.

“The business model of payday lending and the industry relies on repeat borrowing,” says Stinler. “It’s a product that causes a debt trap that actually pushes people out of the financial system.”

In states that don’t allow interest rates above 36% or ban payday loans, there are no payday lenders, according to the Pew Charitable Trusts.

Consumers have other options

Some high-interest loans, like pawnbrokers, may stay after a rate cap is put in place, Duke says, but limiting consumers’ options could force them to miss bill payments or incur late charge.

Illinois State Senator Jacqueline Collins, D-Chicago, who was a lead co-sponsor of the Illinois consumer loan rate cap that was signed into law in March, says She hopes the new law will remove the distraction of payday and other high-interest loans and give state residents a clearer view of affordable alternatives.

Credit unions, for example, can offer small loans. Although credit scores are factored into a loan application, a credit union often has a history with a borrower and can assess their ability to repay the loan using other information. This can make it easier to get a loan from a credit union.

For consumers struggling to pay their bills, Stifler suggests contacting creditors and service providers for a payment extension. She recommends consumers turn to credit counseling agencies, which may offer free or low-cost financial assistance, or religious organizations, which can help provide food, clothing and transportation assistance to get to to a job interview.

Exodus Lending is a Minnesota nonprofit that advocates for fair lending laws and refinances residents’ high-interest loans with interest-free loans.

Many people who seek help from Exodus say they chose a high-interest loan because they were too ashamed to ask a friend or family member for help, says Executive Director Sara Nelson-Pallmeyer. If Minnesota caps interest rates on small, short-term loans — which a bill pending in the legislature seeks to do — she says she’s not worried about how consumers will will get out of it.

“They’re going to do what people do in states where they’re not allowed,” she says. “Borrow from people you care about, ask for more hours, take a second job, sell your plasma – what people who don’t go to payday lenders do, and that’s most people.”

More from NerdWallet

Annie Millerbernd writes for NerdWallet. E-mail: [email protected].

The Baby Boomer Wealth Boom | City newspaper

More and more baby boomers are retiring and some are dying now. They are leaving behind a huge pile of money that the media has called the “greatest transfer of wealth” in modern history: a collective net worth that currently stands at $ 35 trillion, much of it will be. passed on to their heirs. It’s so much money that, understandably, the Biden administration is looking at ways to tax it, charities and nonprofits are looking for their share, and estate lawyers are licking their chops at the prospect. to help plan how everything is distributed.

Yet reporting on this wealth transfer overlooks something fundamental: a simple explanation of how baby boomers have amassed this wealth in the midst of an alleged massive financial crisis brought on by alleged inadequacies in our retirement systems. private sector, which four decades ago began to move from defined benefit pension plans to individual savings accounts. Rather than leaving a generation private, as critics have predicted for years, this shift has helped place an unprecedented amount of money in the hands of baby boomers, while exposing the inadequacy of systems. defined benefit plans that persist today in some places, especially in the ill-advised public sector.

The seeds for change were planted in the 1960s, amid several well-publicized failures of private pension systems (including a plan covering some 10,500 workers and retirees from a failed Studebaker auto plant in Indiana. , leaving registrants with only a few cents on the dollar). Pushed by such disasters, Congress created legislation to govern plans and protect employees, including rules on how workers should be invested in those plans and what constituted minimum funding requirements for pensions. The new rules seemed logical until it became clear that they had sharply increased the cost of funding defined benefit plans, which guarantee workers a lifetime income based on a formula that takes into account years of service. and the final salary of a worker.

Unable to meet these affordable costs and wary of the risks now involved, companies quickly began to move towards defined contribution plans, in which employers set aside a specific amount for each worker in an individual account. – a type of plan formalized in a 1978 Amendment to the United States Pension Act. The share of workers receiving defined benefit plans only in the private sector has therefore fallen sharply, from around 25% in the 1970s to around 3% today, while the share of participants in pension plans company-owned defined contribution pension has grown from 8 percent in 1980 to 31 percent today. Around the same time, Congress passed laws to allow those who worked for companies that did not offer retirement plans to save on their own through individual retirement accounts.

Boosted by market returns, the assets of these contribution plans have skyrocketed. In the last 25 years alone, the combined assets of employer-sponsored defined contribution plans and individual retirement accounts (many of which are renewals of corporate defined contribution plans by workers who have changed jobs) were multiplied by eight, to reach 23 trillion dollars. far exceeding holdings in any other category of pension plan. These accounts now account for nearly two-thirds of all U.S. retirement assets, down from less than 25% in 1995. They are the main reason Americans cling to some $ 34 trillion in retirement savings, a surprising increase of about $ 13 trillion two and half a decade ago.

Over time, the rate at which Americans have saved for retirement has increased dramatically. A 2016 study of retirement savings earnings over a 27-year period by Andrew Biggs of the American Enterprise Institute found that retirement savings of those aged 55 to 69 increased 126% after inflation , to reach $ 448,292. Not all of the gains were concentrated among the rich either. As Biggs points out, even the retirement savings of middle-income Americans increased by 70% after inflation at that time. These gains are accompanied by a sharp drop in poverty among the elderly. When Social Security benefits are included in the mix, less than 10 percent of older people retire with less than half of the income they earned while working.

However, something very different has happened in the public sector. There, defined benefits survived, in large part because federal legislation setting standards for private plans did not apply. Local governments have promised workers attractive pensions using more flexible accounting principles, making these plans more affordable. As a result, 86 percent of state and local government employees still have access to defined benefit plans today, but at enormous public cost. States and communities have harmed these systems by an estimated $ 1.7 trillion, for which taxpayers are largely responsible as more public servants retire. Even in the midst of this financial disaster, public sector union leaders fought vigorously to preserve defined benefit plans, calling efforts to throw them away in favor of individual savings accounts as a disaster that would increase poverty among workers. older people and increase retirement insecurity.

The attractiveness of defined benefit plans is understandable. They offer predictability, which seems especially important amid all the media coverage of the pension crisis facing workers in the private sector. But they only pay off for workers who embark on a long public service career with a single employer and then live long enough to receive a substantial portion of their benefits. These pensions set very little aside for workers in the early years of their employment. A 2013 Manhattan Institute study of public school pension systems, for example, found that a New York teacher who started in schools at age 25 would, at age 50, accumulate the equivalent barely $ 100,000 in retirement savings through a benefit plan. But if that teacher stayed for another 15 years, those savings would reach the equivalent of $ 600,000. The problem is that less than 33 percent of those who start a teaching career still stay 20 years. The rich pensions are the prerogative of the few who hold on. And even after a long career, much of the benefit wears off when the worker dies, leaving little to pass on. While some defined benefit plans offer spousal benefits (typically around 50 percent of the initial pension), these are costly for the worker and, of course, leave nothing to pass on to children and grandchildren.

The government is nothing but greedy for the wealth created in the private sector. Now that the rhetoric is shifting from “these poor retired baby boomers” to “these rich retired baby boomers,” proposals have emerged to tax these economies in new ways. The Biden administration proposed a capital gains tax on retirement accounts upon transfer to heirs. Other proposals include capping the amount that can reside in tax-free retirement accounts and taxing the rest. For years, politicians from both parties have considered “saving” Social Security in part by reducing or eliminating the benefits earned by those who have racked up millions of dollars in retirement accounts – an idea that looks like punishing them. people who did the right thing in preparing for their retirement. golden years.

As the Baby Boomers prepare to step not quietly, but richly, into this good night, the struggle for what they will leave behind has only just begun.

Photo: singebusinessimages / iStock

Use Chase Sapphire Reserve travel insurance to cover late fees


At first I was faced with an eight hour delay which quickly turned into an overnight stay. American was going to pay for a hotel, but I would be largely on my own for meals, as well as any other expenses I might incur from the extended trip.

Return flight from Bogota, Colombia on American Airlines.

Thomas Pallini / Insider

While many credit cards offer some form of travel insurance, not all are created equal and some only intervene if the cardholder dies in a plane crash. But Sapphire Reserve offers three types: Trip Cancellation / Interruption Insurance, Baggage Delay Insurance, and Travel Delay Reimbursement.

credit card

Joe Raedle / Getty Images

As the name suggests, Trip Cancellation / Interruption Insurance covers expenses when a trip is “cut short or canceled” due to cases such as illness, inclement weather, injury, death, terrorist action, hijacking and jury duty or subpoena that cannot be postponed. Chase will cover up to $ 10,000 per trip, if eligible.

Canceled flight

REUTERS / Mike Segar

After I landed in Dallas, American gave me a hotel voucher, at my request, so that I could take a shower during my four hour layover. I took a shuttle from the hotel to the hotel, about five miles from the airport itself, and had only planned to shower in the room and then return to the hotel. airport.

Stuck in the airport terminal

Return flight from Bogota, Colombia on American Airlines.

Thomas Pallini / Insider

Americans are looking for their credit cards again and debt is on the rise


Americans borrowed significantly more money in May, according to new data from the Federal Reserve’s consumer credit report released in July. There was a 10% increase in the use of credit on a seasonally adjusted annual basis in May 2021. This is the largest increase since 2016, when consumer credit experienced a seasonally adjusted annual increase of 6 , 9%.

One of the main drivers of this borrowing is the use of revolving credits such as credit cards, although people are also taking on more car loans.

Here’s what that means for individuals and the economy as a whole.

Start your journey to financial success with a bang

Get free access to the selected products we use to help us meet our financial goals. These fully verified choices could be the solution to help you increase your credit score, invest more profitably, build an emergency fund, and more.

By submitting your email address, you consent to our sending you money advice as well as products and services which we believe may be of interest to you. You can unsubscribe anytime. Please read our privacy statement and terms and conditions.

Is the increase in borrowing good or bad?

In May 2021, total consumer credit outstanding reached $ 4.25 trillion. This figure is higher than the $ 4.19 trillion of outstanding debt in April 2021 and reflects a large increase from the $ 4.186 trillion in the fourth quarter of 2020. This excludes mortgages, which constitute the category of largest debt.

This sharp increase in consumer debt is a major change from last year, when the use of consumer credit declined for the first time since the 2009 recession. steadily increased in 2021, the 10% increase in credit utilization in May is almost double the previous increases reported by the Federal Reserve.

In some ways, this could be a good sign that people are borrowing more. Increased debt sometimes suggests that consumers are more optimistic about their financial future and more confident in their job security. And as people spend money, it spurs economic growth that is good for everyone.

However, it can also be a problem if people turn to credit cards because they can’t afford the essentials without them, or if they have to take out very large car loans.

Unfortunately, inflation has started to hit people’s wallets. The prices of goods and services have increased significantly this year. This is due to pent-up demand for COVID-19, supply chain issues linked to the pandemic, and government stimulus funds increasing the supply of foreign currency and increasing demand.

Some people may charge more on their credit cards because of how this inflation affects their budgets. And the price of used cars has skyrocketed this year, leading to an increase in auto loans.

Ultimately, individual borrowers should be aware of the risks of increasing revolving debt, even if they are optimistic that the economy is improving.

Ideally, people should not borrow more than they can afford to pay off when the credit card bill is due, thus avoiding the high interest rates on credit cards. And it’s generally good to keep auto loan balances as low as possible – and stick to loans with short repayment terms – to avoid committing to large monthly payments that could affect other goals. financial. With Federal Reserve data clearly showing a recovery in borrowing, it’s worth remembering these basic borrowing ideals to help keep you on a solid financial footing.

5 tips for getting a loan if your credit score is in the 600s


If you are in need of a loan and your credit score is in the range of 600, you might not be sure about your chances of getting approved. You don’t need to worry. Based on the correct score, the 600 are in the fair and good credit ranges. With either one, it is possible to get approval from multiple lenders.

Even if you are well above the credit score you need for a personal loan, the loan process is still important. You don’t want to pick the wrong lender and get turned down or end up paying a higher interest rate than you need to. Follow these tips to get the loan you need for the best price.

Start your journey to financial success with a bang

Get free access to the selected products we use to help us meet our financial goals. These fully verified choices could be the solution to help you boost your credit score, invest more profitably, build an emergency fund, and more.

By submitting your email address, you consent to our sending you money advice as well as products and services which we believe may be of interest to you. You can unsubscribe anytime. Please read our privacy statement and terms and conditions.

1. Find lenders with minimum requirements that you can meet

Each lender has their own minimum credit score for potential borrowers. Some are open to borrowers with a score of 580. Others may require a score of 660, 680 or higher. By choosing a lender with a minimum requirement that you can meet, you have a higher chance of being approved.

Your FICO® score is the type of score that matters most. It is the most used score by lenders, so when you want to get your credit score, try using a method that provides your FICO® score.

If your credit score is in the 600s, start by looking at personal loans for fair credit. The fair credit range is 580 to 669 under the FICO system, so you should find lenders that work for you. If your score is in the 600s, you can even qualify for the best personal loans.

Ascent’s selection of the best personal loans

Are you looking for a personal loan but don’t know where to start? Ascent’s choices for the best personal loans help you demystify the offers available so that you can choose the one that best suits your needs.

See the selections

2. Check if you are pre-approved

Most lenders offer online pre-approval tools. These allow you to check loan rates without affecting your credit score.

To use a pre-approval tool, you need to enter some basic information. Lenders usually want your name, address, income, desired loan amount, and social security number. When you submit the form, the lender performs a gentle credit check on you. Then it will let you know if you are pre-approved for a loan. If so, it will tell you the amount and the interest rate you could get.

A personal loan pre-approval is not a guarantee. But it does give you an idea of ​​which lenders will approve you and what kind of rates you can get with each.

3. Find a co-signer

A co-signer is someone who agrees to take on a loan with you. For this reason, the lender can use the information of the co-signer to decide if they will approve the request and what kind of rate they will offer.

Applying for a personal loan with a co-signer who has a higher credit rating than you could help you get a bigger loan, a lower interest rate, or both. The challenge is to find someone to do it for you. The co-signer is taking a risk because they will be just as responsible for the loan as you are. If you get a loan with a co-signer, make sure you always pay on time to avoid hurting both of your credit scores.

4. Pay your credit card balance before applying

Raising your credit score before applying for a loan can make a big difference. Even a small increase could help you get a good interest rate that will save you hundreds of dollars.

A quick way to increase your credit score is to pay off your credit card balance. This is due to a factor called the credit utilization rate, or the relationship between your card balances and your credit limits. For a good credit rating, it is good to keep this ratio below 30%. So for every $ 1,000 of credit you have, don’t use more than $ 300.

The Ascent’s Choices For The Best Debt Consolidation Loans

Want to pay off your debts faster? Check out our list of the best personal loans for debt consolidation and lower your monthly payments with a lower rate.

Pay off debt faster

The great thing about using credit is that only the current number counts. Let’s say you have 70% credit usage. If you pay up to 25%, your credit score will increase within a month when the credit card companies report your new balances.

5. Beware of predatory lenders

Unfortunately, there is no shortage of predatory loan offers. Lenders offering payday loans and auto title loans are two examples. They often charge extremely high interest rates, with lenders in some states charging APRs above 500%. The reason they are able to attract consumers is that they have fewer minimum requirements. Some will approve borrowers without even checking their credit rating.

Research any lender you are considering to see if they are trustworthy. Before accepting a loan, review the contract, including the repayment terms and the interest rate. If the cost of the loan makes repayment nearly impossible, keep looking for other options.

A credit score in the 600s is enough to qualify for a loan. Try to pay off all credit card balances to get your highest possible credit score before you apply, or see if you can find a co-signer to help you. After that, just compare your options and get the amount you need at the best possible rate.

1 Big risk for Macy’s shareholders


For many years, Macy’s (NYSE: M) The store-branded credit card has made a big contribution to the financial performance of the department store giant. In fiscal 2019, net credit card revenue totaled $ 771 million, representing more than half of the company’s adjusted operating profit. Last year, Macy’s recorded $ 751 million in net credit card revenue, despite the impact of the pandemic.

however, Citigroup – the company’s credit card partner – recently exercised an option to terminate its contract with the retailer ahead of schedule. This creates a ton of uncertainty for shareholders that won’t be resolved until both parties negotiate a new deal or Macy’s pick a new credit card partner.

Why the credit card program is so important

A subsidiary of Citibank (Department Stores National Bank) issues credit cards on behalf of Macy’s and its premium brand Bloomingdale’s. These include a simple store credit card that can only be used at Macy’s and a American Express card that can be used with any merchant that accepts AmEx. Macy’s and Bloomingdale’s branded cards account for 40-50% of a retailer’s spend in a typical year.

Store credit cards tend to carry high interest rates, which makes them very lucrative for banks. Under its agreement with Citibank, Macy’s receives payments based on the amounts billed on its private label and co-branded cards, as well as bonuses for opening new card accounts and incentive payments based on them. performance of its card portfolio.

Image source: Macy’s.

These high-margin revenue streams have always contributed significantly to Macy’s earnings. However, they have become even more important in recent years as the favorable performance of the portfolio has resulted in growth in net credit card income, even as profit margins in core retail operations have declined significantly.

A change is coming

The long-term agreement with Citibank gave the bank an early termination option if sales over a 12-month period at Macy’s declined by more than 34% compared to the period July 2006 to June 2007. Due to the impact of the COVID-19 pandemic, sales for the 12-month period ending February 2021 fell enough to trigger this option.

In its latest quarterly report, the company revealed that Citibank exercised its early termination option on June 4. Macy’s has six months from that date to decide whether to purchase the credit card receivables on its own or to choose a new credit card partner to purchase them on its behalf. He then has six additional months to finalize the transaction.

Of course, Macy’s and Citibank could also choose to negotiate a new deal. Macy’s chief financial officer Adrian Mitchell recently said the two companies are still discussing a new deal.

Not a disaster, but something to watch

In his comments at recent investor conferences, Mitchell noted that the company’s credit card portfolio is very healthy and should be attractive to many financial institutions. In addition, department store sales have exploded since the start of the year.

Chart M Revenue (quarterly growth year-on-year)

Macy’s revenue (quarterly year-on-year growth), given by YCharts. YoY = year after year.

In May, Macy’s increased the midpoint of its full-year sales forecast by more than $ 1.7 billion. He now expects sales to rebound at least 25% from FY2020 levels this year. The company also nearly tripled the midpoint of its annual profit forecast.

The rapid improvement in sales and profits should give potential Macy’s partners more confidence in the sustainability of their business – and therefore, their credit card program. Yet Citibank would not have exercised its early termination option if it had not wanted to lose Macy’s credit card business. So it’s unlikely that any other credit card issuer will offer Macy’s better terms than it had under the deal Citibank just terminated.

On the bright side, Macy’s remains a large retailer and will likely generate nearly $ 10 billion in sales from its credit cards this year. This should make his credit card portfolio attractive enough that the terms of his next credit card deal aren’t too much worse than the last. But until Macy’s signs a new deal and explains the impact on its future credit card revenue, uncertainty over this important source of revenue will continue to pose a big risk to shareholders.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

COVID Outbreaks Rising Among Young People | New

Coronavirus outbreaks are on the rise in San Bernardino County among young, healthy individuals, according to county health officials.

While most of these patients do not suffer from life-threatening illnesses, they still pose a threat to the county’s most vulnerable residents, officials said.

Dr Rodney Borger, an emergency physician at Arrowhead Regional Medical Center in Colton, said his greatest concern was that unvaccinated people spread the virus to residents who are older or vulnerable to serious consequences.

He said a significant portion of the population has declined or delayed getting the vaccine, and that virtually every new case involves people who have not been vaccinated.

COVID-19 will remain active as long as a significant portion of the population continues to neglect to get vaccinated, Dr Borger said.

He said young people who receive COVID still suffer from unpleasant effects, and some may experience long-term effects such as fatigue, shortness of breath, cough, joint pain and chest pain.

Dr Borger said the persistent population of unvaccinated individuals is of particular concern due to the emergence of the Delta variant of COVID, which is more contagious than previous versions of the virus.

New data released by the California Department of Public Health shows that 35.6% of the coronavirus variants analyzed in June were identified as the Delta variant, which was first identified in India.

By comparison, in May, variants made up only 5.6% of coronavirus cases analyzed in the state.

How To Increase Your Credit Score Even If It Is Really Low


Your credit score impacts everything from jobs and apartment rentals, car loans and more.

GREENSBORO, NC – Credit scores can affect everything from the interest rate you pay on a mortgage or loan to your insurance premium. So imagine what it is for the millions of people who have no credit history or a very low credit score.

Consumer Reports has some important tips on the right way to rebuild your credit.

Here’s the kicker: if you want to build your credit, you have to get credit. But how do you get credit if you have bad credit?

An important first step: open a bank account, take out several small loans and make one-off monthly payments, which over time should improve your score.

Next, consider applying for what is called a secured credit card, which means you have secured the card with cash.

You can also ask a family member with good credit to add you to their credit card. Just make sure you have a good relationship with the person because if you miss or are late with a payment it can hurt both your scores.

And if you have debts in the process of collection, pay them off ASAP and make sure you pay all of your bills on time to avoid collections in the first place.

“Once you’ve paid off any debt in collection, many credit scoring systems won’t weigh them down heavily when calculating your score,” says Lisa Gill of Consumer Reports.

And be sure to check your credit report carefully. Dispute any mistakes you might find by sending a certified letter with proof to the big three credit bureaus. They have about 30 days to respond.

Consumer Reports says it is wary of any quick credit service that offers help for a fee. You don’t have to pay to repair your credit. It just takes a solid financial plan and some time.

COVID-19 Has Pushed Cybercriminals Into High Speed ​​- How To Protect Your Personal Finances


Cybercrime is on the rise through phishing scams and other means. And as fraud increases, so does the need to protect your identity. (iStock)

With the onset of COVID-19 and the shift to remote working, emerging threats like cybercrime have exploded. And the types of cybercrime have also increased: phishing campaigns have increased by 11% in the past year while ransomware attacks have increased by 6%, according to the Verizon Business 2021 Data Breach Investigation Report. The cases of false declarations of the organized crime type have multiplied by 15 compared to 2020.

“People never think they will be targeted,” said John Bauer, president and chief revenue officer of IDIQ, an identity theft, credit monitoring and data breach management company. “But when it comes to cybercrime, it’s not about if but when your personal information is at risk. Monitoring your credit report and identity theft is essential to protect yourself. These services may be accompanied by identity theft and identity theft insurance. recovery aid, so you are protected if you become a victim.

“You have insurance for your automobile and your home, but you’re much more likely to be a victim of identity theft than to have your home burnt down,” Bauer said. “Identity theft protection is something you shouldn’t be without.”

To start fighting cybercrime and monitoring your credit, contact Credible to help you monitor your credit score and history and alert you to potential fraud and more.


Anyone Can Be Targeted by Cybercriminals

It is not just individuals who are the targets of Internet fraud. Private sector companies have experienced more cybercrime attacks in the cloud, with attacks on web applications accounting for 39% of all data breaches, according to the Verizon report. Cybercriminals could obtain your information through a data breach or, conversely, target you to gain access to your business.

“Criminals don’t just target your money,” Bauer said. “They can impersonate you on social media or other platforms and target friends and family members. They can also target you for access to your workplace. identification, they can target anyone who trusts you.

“Criminals can impersonate you offline as well,” he said. “If they have your personal information, they can get an ID, like a driver’s license, in your name and use that ID when they are arrested or even arrested. It can take months or even years, to restore your identity. “

The Verizon report found that amid growing cyber threats, 85% of all data breaches involved a human element. And in some industries, like the finance and insurance industries, the majority of the information obtained (83%) is personal data.

“With the large number of data breaches, it’s safe to assume that your information is already at risk,” Bauer said. “What you can do is be proactive in monitoring your credit report and identity. This allows you to see changes as they occur and act quickly in the event of possible fraud. “

To make sure you protect yourself from criminal activity such as cybercrime threats, sign up for a credit monitoring service. Visit Credible to help you get started.


Cyber ​​attacks are on the rise

Today, cybercrimes are becoming multi-layered and come from multiple angles as the types of cybercrime increase, Bauer explained. Fraud of all kinds has skyrocketed during the pandemic, with 93% of all fraud attacks occurring online, according to the Q2 2021 Financial Crime Report from Feedzai, a cloud-based financial crime management platform. Overall, the report shows that cyber attacks increased by 25% in the first four months of the year.

“The world may have stopped in 2020, but not the financial criminals,” said Jaime Ferreira, senior director of global data science at Feedzai. “Using digital forms of shopping, banking and payment has made it easier for fraudsters to attack more people, faster. As fewer consumers feel the need to visit a bank branch or shopping mall, we need to adapt financial services and payments to protect consumers. And as consumers, we need to continue to be vigilant and educate ourselves on how to stay safe. ”

COVID-19 has created the perfect storm for criminal activity such as ransomware attacks to grow, accelerating an already growing trend, an expert explained.

“The pandemic has accelerated the shift to work and remote shopping,” Bauer said. “This has pushed cybercriminals into high gear, attacking personal computers and creating bogus websites to access personal and business information. The COIVD-19 pandemic has provided an ideal platform for cybercriminals to exploit.”

Of all types of cybercrime, phishing campaigns continue to grow and are one of the biggest cyber threats Americans face today.

“Phishing continues to be one of the biggest threats, and with that comes the use of stolen credentials and misrepresentation,” Bauer said. “There has been the biggest increase in misrepresentation. This happens when personal credentials are stolen and hackers not only target your personal accounts, but they can then log into your work network and start stealing or holding files hostage for ransom. “

With a credit monitoring service, you can receive instant alerts about late payments, fraudulent activity, credit rating changes, and more. Check out some of Credible’s partners here.


There is something you can do to prevent identity fraud

The best offense is good defense. With an emerging crime threat involving cybercriminals seeking access to your personal information, it is more important than ever to remain vigilant.

“The COVID-19 pandemic has had a profound impact on many security challenges organizations currently face,” said Tami Erwin, CEO of Verizon Business. “As the number of companies moving critical functions to the cloud increases, the potential threat to their operations may become more pronounced as malicious actors seek to exploit human vulnerabilities and take advantage of increased reliance on them. with regard to digital infrastructures. “

Many companies are incorporating cybersecurity training into their workflows to increase security and awareness, and some need antivirus software to prevent malware attacks and general internet security. Individuals should also closely monitor their own credit to ensure that they have not been the victim of identity theft.

“If you are not in the habit of monitoring your credit report and identity on a daily basis for suspicious activity, this is the first place to start,” said Bauer. “A credit report and identity theft monitoring service will alert you immediately to potential fraud, so you can stay ahead of identity thieves. Using a service that monitors your personal information in time real is Fort Knox to prevent your identity from being stolen. “

See your options for monitoring credit and protecting yourself against identity fraud, contact Credible to get started today.

Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.

What to know if your Wells Fargo personal line of credit is canceled


This item is reprinted with permission from Nerdwallet.

Wells Fargo WFC,
+ 3.62%
Customers have started receiving notification of their personal line of credit accounts being closed, and the company confirmed Thursday that it will no longer offer the product. Once accounts are closed, customers will no longer be able to draw on them.

The company announced last year that it would discontinue the product, Wells Fargo spokesman Manuel Venegas said in an emailed statement. But if the impending closure of your account is news to you, it could be a nasty surprise.

Not only will the accounts be closed, but Wells Fargo has also indicated that consumer credit scores could suffer.

“We realize that change can be awkward, especially when customer credit can be affected,” Venegas said.

Here’s what you need to know if your account will be closed, how your credit might be affected, and other borrowing options to consider.

What to expect when your account is closed

Customers will receive 60 days’ notice before their account is closed, Venegas said in the release, along with the reminders leading up to it. This could be a signal that it’s time to stop making withdrawals and turn your attention to paying off.

Once the account is closed and you can no longer withdraw from it, your annual percentage rate will be frozen and this is the rate you will pay on the remaining balance, Venegas confirmed.

Revolving lines of credit, offered in amounts ranging from $ 3,000 to $ 100,000, could be used by Wells Fargo customers to consolidate high interest debt and pay for large expenses.

Don’t miss: Biden administration to write off $ 55.6 million in student debt for students scammed by their schools

He also confirmed that no other Wells Fargo products are affected and that he will continue to offer credit cards and personal loans.

How Your Credit Score Could Be Affected

The effect of a Wells Fargo line of credit depends on your unique credit profile, said Tommy Lee, senior scientist for FICO FICO,
+ 1.55%
data and credit rating company, in an emailed statement.

Several factors affect your credit score, and your available credit versus used credit has a big influence. If you have multiple open credit cards with high limits and low balances, the impact should be low. But if your other accounts have low limits and high balances, it could hurt.

“When a line of credit is closed, some of your available credit is no longer on the table,” Lee said. The lower your ratio of balances to your total credit limits, the better when it comes to your FICO score.

Read also : My husband has $ 75,000 on his credit card and plans to spend $ 8,000 on sporting events. What can I do? Am I responsible if he dies?

Closing an account also reduces the average age of your accounts and your number of accounts, both of which have less influence on your score.

How to protect your score
  • Pay all bills on time. Payment history is the most important factor in credit scores.

  • If you need to replace your line of credit, be strategic. If you’ve recently applied for credit, you might want to wait a few months, as multiple applications in a short period of time can lower scores.

  • Keep an eye on your credit reports to make sure the Wells Fargo change is reported correctly. You have free weekly access to your credit reports using annualcreditreport.com.

Alternative borrowing options

Especially if you have a large outstanding balance on your line of credit, your debt-to-income ratio can be high, making it more difficult to qualify for other forms of credit. But once you’re ready to borrow again, credit cards and personal loans are the closest alternatives to personal lines of credit.

Credit card: A credit card is another revolving line of credit – you withdraw money by swiping the card and making monthly payments for the balance. Credit limits are lower, and credit card purchases are generally lower than what you’re used to with a personal line of credit.

A credit card may be the right choice if you:

  • Can avoid interest by paying the full balance every month.

  • Qualify for a no-interest promotion. These are often reserved for borrowers with good or excellent credit.

  • Need a way to pay for regular expenses, especially if your card comes with rewards for things like groceries.

Personal loans: Personal loans are the lump sum cousin of personal lines of credit. It’s best to borrow once you are sure how much you need because you can’t borrow any easier. Compare loan offers to find the lowest rate and the monthly payments that fit your budget.

A personal loan may be the right choice if you:

  • Qualify for a loan with a low APR and affordable payments.

  • You want to borrow a large amount of money to consolidate high interest debt.

  • Need to fund a big one-time expense, like a home improvement project. Personal loans are not designed to be taken out frequently.

  • May make monthly payments over the life of the loan to prevent your credit score from being affected.

Annie Millerbernd writes for NerdWallet. Email: [email protected]

Bev O’Shea writes for NerdWallet. Email: [email protected] Twitter: @BeverlyOShea.

Behind closed doors: the redistribution commission could become less transparent

A powerful commission tasked with redrawing political boundaries for Hawaii’s state and congressional districts appears to be heading for more secrecy than in previous years, with the formation of authorized private interaction groups instead of public hearings committees.

Establishing draft rules to do most of its work behind closed doors took most of a one-hour Redistribution Commission meeting on Tuesday, with a substantial part of the meeting held in session. executive as the commission sought advice from its lawyer on whether the government to set up authorized interaction groups followed Sunshine Law.

Sandy Ma, executive director of Common Cause Hawaii, has called for authorized interaction groups to be canceled and redone to meet the requirements of the Sunshine Law.

“We want to make sure that the public is fully involved in the process as there were concerns during the last redistribution that the public was not fully involved,” Ma said. “We want to make sure that transparency is respected. and that the public can fully participate. “

Becky Gardner, a former staff member of a Big Island lawmaker, echoed Ma’s concerns.

“I ask this commission to err on the side of transparency and accountability,” she said. “The more open this process is and beyond the Sunshine Law, … (we will have) more people engaged and we will not have challenges like we did in 2011.”

The committee came out of its closed-door session with Chairman Mark Mugiishi saying that forming groups to develop procedures and prepare proposed reallocation plans was legal, but the committee will vote on them at the next meeting to comply with Sunshine Law.

“All the commissioners are convinced that the procedure was legal and appropriate,” Mugiishi said.

The Island of Hawaii’s only representative on the commission, Dylan Nonaka, a real estate broker from Kailua-Kona, said the commission plans to offer the public the ability to create their own maps once the numbers are down and the software in place. Draft maps will be brought to each island for public hearings, he said.

The nine-member commission is formed every 10 years to redraw the districts for the two state congressional seats, 25 state senate seats and 51 state chamber seats based on the decennial census . Its work is important because it determines the number of House and Senate districts on each island, as well as the regions they will represent.

This is especially important for the island of Hawaii, the fastest growing island in the state and which could be heading towards its eighth member of the House.

The purpose of redistribution is to ensure equal representation for all residents. The aim is to draw legislative constituencies with as many people as possible.

The state had 1,455,271 residents, up 94,970 from the 2010 census, according to state-level data released in May by the Census Bureau. More specific demographics have yet to be released, but annual estimates indicate Oahu is losing population while neighboring islands are gaining more.

The Supreme Court presumed that a plan is unconstitutional if the districts are 10% larger or smaller than the ideal population, which is obtained by dividing the total population by the number of districts.

This means that the ideal population for each of the state’s 51 districts would be around 28,535, or 25,681 to 31,388 to stay within the 10% gap. The ideal population for the 25 States Senate districts would be 56,635 or between 50,971 and 62,298 to stay within the 10% gap.

This is a daunting task for the Redistribution Commission, which also tries to avoid so-called “canoe districts,” where a state legislator represents parts of two or more islands. This has proven unsatisfactory for both lawmakers and residents, who feel their representation is diluted compared to having a state lawmaker representing a single island, opponents of canoe districts say.

Email Nancy Cook Lauer at [email protected]

Tracy family say expanding child tax credit will help lift them out of poverty


Melinda Ramirez, her husband and four children – all under the age of 17 – have experienced fires, homelessness and uncertainty. After the fire, we had to live on all of our credit cards and were in deep debt. We had a lot of credit card debt and high interest rates, we were never going to get out of it, ever, ”Ramirez said. But through it all, she also had help. “It will change everything. It will change our whole life,” she said. After losing their home to a fire about five years ago and a nine-year wait, the family moved into social housing and Ramirez found a new job. . “Being homeless back then is what led to my job where I work now, working with the homeless,” Ramirez said. Then the pandemic struck. “I had a lot of work to do during the pandemic, but my husband didn’t. He does landscaping,” she said. Ramirez says the stimulus payments helped. “We never would have it. been able to get out of that credit card debt, except the stimulus checks, that saved us, “she said. Even more help is on the way. They will receive $ 12,000 a year, at starting next week, “said Rep. Josh Harder, a Democrat who represents southern San Joaquin County and Stanislaus County. Harder said the biggest child tax credit of all time will come to 54,600 households, 196,300 children in the Central Valley as of July 15. The average family will benefit an average of $ 5,000 next year. ”This child tax credit aims to level the playing field and to s “Ensure that no matter where you were born, you have the same access to opportunities,” said Harder. Ramirez says with the extra money comes a potentially better future. “It’s going to put us just in that bracket where we can afford to live somewhere outside of government housing. It means we’re going to have a house,” she said. The expanded child tax credit is only a one-year increase. Congressman Harder said he was working on a bipartisan effort to extend the credit and make it permanent. For families in Stanislaus and southern San Joaquin counties who might need help from the Harder’s representative office, you can contact him at Harder.house.gov, or by phone at 209-579-5458. The IRS Non-Reporting Tool can be found here.

Melinda Ramirez, her husband and four children – all under the age of 17 – have experienced fires, homelessness and uncertainty.

“After the fire, we had to live on all of our credit cards and we had a lot of credit card debt. We had a lot of credit card debt and high interest rates, we were never going to. get out of it, never, ”Ramirez said.

But through it all, she also had help.

“It will change everything. It will change our whole life,” she said.

After losing their home to a fire about five years ago and a nine-year wait, the family moved into social housing and Ramirez found a new job.

“Being homeless back then is what drove me to my job as I work now, working with the homeless,” Ramirez said.

Then the pandemic struck.

“I had a lot of work to do during the pandemic, but my husband didn’t. He does landscaping,” she said.

Ramirez says the stimulus payments have helped.

“We would never have gotten out of this credit card debt except the stimulus checks, it saved us,” she said.

Even more help is on the way.

“They’re going to be getting $ 12,000 a year, starting next week,” said Rep. Josh Harder, a Democrat who represents southern San Joaquin and Stanislaus counties.

Harder says the biggest child tax credit of all time will reach 54,600 households, 196,300 children in the Central Valley starting July 15. The average family will benefit an average of $ 5,000 next year.

“This child tax credit is about leveling the playing field and ensuring that no matter where you were born you have equal access to opportunities,” said Harder.

Ramirez says that with the extra money comes a potentially better future.

“It’s going to put us just in that bracket where we can afford to live somewhere outside of government housing. It means we’re going to have a house,” she said.

The expanded child tax credit is only a one-year increase. Congressman Harder said he was working on a bipartisan effort to extend credit and make it permanent.

For families in Stanislaus and southern San Joaquin counties who may need assistance from the Harder’s representative office, you can contact him at Harder.house.gov or by phone at 209-579-5458.

The IRS Non-Filer Tool can be found here.

Wells Fargo to close all personal lines of credit. Here is why it can hurt your credit score.


Wells Fargo will cut all personal lines of credit over the next two weeks, according to a letter to a customer reviewed by CNBC.

Lines of credit, which typically cost between $ 3,000 and $ 100,000, were marketed as a way for consumers to consolidate high interest credit card debt, pay for home renovations, or avoid overdraft fees. on current accounts linked to lines of credit.

Consumers with outstanding balances will have to make the minimum required payments, the six-page letter says, and the bank will no longer offer new lines of credit.

Importantly, Wells Fargo noted in the letter that account closings could impact consumer credit scores.

Wells Fargo told NJ Advance Media it was simplifying its product offerings.

“We made the decision last year to no longer offer personal lines of credit because we believe we can better meet the borrowing needs of our customers through credit cards and personal loan products,” said the spokesperson James Baum. “We realize that change can be awkward, especially when customer credit can be affected. “

“We provide 60 days’ notice with a series of reminders before closing, and we are committed to helping every customer find a credit solution that matches their needs,” he said.

The potential repercussions on a consumer’s credit rating are not negligible. This is because lines of credit are part of a credit score calculation called the credit utilization ratio. It compares the amount of credit available to a consumer with the outstanding balances. When the amount of available credit decreases relative to the balances owed, it means that a consumer is using more of their available credit, which is negative for credit scores.

For example, if you have $ 30,000 of available credit with balances of $ 10,000, you are using up one-third of your available credit.

But if part of your credit includes a $ 10,000 line of credit and that line is closed, you will now be using 50% of your available credit, which seems less attractive to lenders.

If you have a Wells Fargo line of credit with a balance and you don’t want closing the account to hurt your credit score, consider paying off the balance as soon as possible. If you are unsuccessful, consider opening a new account with the same available balance as the one being closed to avoid changes in your credit utilization rate. Just don’t create a new balance on the new account, or you’ll negate the benefits of a higher credit limit for your credit score.

Although Wells Fargo did not specifically explain why it was pulling out of the personal line of credit business, CNBC said the bank was pulling out of certain financial products due to Federal Reserve limitations imposed in 2018 after the scandal. fake Wells Fargo accounts.

Last year, Wells Fargo stopped writing new home equity lines of credit, CNBC said.

Subscribe now and support the local journalism you rely on and trust.

Karin Price Mueller can be contacted at [email protected].

Did you know? Debit and credit cards are covered by accident insurance


Few customers are aware of this; experts suggest customers check with their bank what types of insurance policies are offered

Bank-issued debit and credit cards come with individual accident insurance coverage, which few customers are aware of.

Consumer activist T. Sadagopan said he only learned about the insurance coverage through a social media post and a recent advertisement given by a public sector bank on his card offer.

A senior official at the Chennai-based Indian bank said the bank provides insurance coverage for debit cards under the RuPay card program as it only issues RuPay debit cards by default. All variants of credit cards issued by the bank are eligible for insurance coverage, he added. Accidental death and permanent total disability insurance is available to clients. Insurance coverage ranges from 50,000 to 10 lakh depending on the debit and credit card variants, the Indian Bank official said. The personal accident policy covers deaths occurring only as a result of unintentional or non-self-inflicted accidents or accidental injuries, he added.

Sources from HDFC Bank said that insurance coverage depends on the type of relationship the customer has with the bank and that insurance coverage starts from 2 lakh and goes up to ₹ 10 lakh for debit and credit cards.

Mr. Sadagopan said that customers are unaware of these facilities offered and that it is the duty of banks to inform customers. One of the conditions for claiming insurance is that the card must be in use and that claims must be made within a specified time frame.

For example, under the Rupay insurance program, notification of the claim must be made within 90 days of the date of the accident and all supporting documents relating to the claim must be submitted within 60 days of the date of the accident. date of notification. He also said that the cardholder should have made an active transaction (a financial or non-financial transaction) 90 days before the date of the accident.

Experts suggest customers to check with their respective banks the type of insurance offered as well as the procedure and conditions for insurance claim.

Prepare now to buy in the fall | Magazine sites


If you’re thinking about giving up renting and buying a home this summer, you’re not alone. Summer is when the home buying season usually shifts into high gear.

Warm weather generally attracts more buyers and sellers and homes sell out quickly. This year, stocks are particularly low and buyers are finding it increasingly difficult to find a home in their price range.

May statistics from the East Central Iowa Association of Realtors show that the average number of days on the market for homes in Dubuque MLS is 26 days. For comparison purposes, the average number of days in the market was 59 days in February. The reduced inventory led to bidding wars between buyers and homes selling above the list price.

Despite this, the rates are at their lowest, which makes buying a home quite affordable. If you are ready to buy, great. But if you’re just soaking your toe in the water, read on.

This column will guide you to make sure you have all of your ducks in a row and be ready to make a solid bid when you find your dream home.

Know (and manage) your DTI

Your debt-to-income ratio, often referred to as the acronym DTI, reflects the relationship between how much you owe and how much you earn.

In a perfect world, potential buyers should have as little debt as possible while earning a regular and stable income. This will allow you to pay off a mortgage on top of any other debt you may have.

Having a higher DTI than you want doesn’t prevent you from getting a mortgage, but the terms around that mortgage – most importantly the type of mortgage – might be different than if your DTI were lower.

When applying for a mortgage, your loan officer will take all of your monthly debt – like student loans, car loans, and current or recurring credit card balances – and divide them by your gross monthly income. Ideally, he or she will want to see a DTI ratio of 45% or less. Some programs have higher DTI limits and others have lower limits. It all depends on the program and the lender, which is why it’s important to shop around for multiple lenders when pre-approving a home.

Credit reports and credit scores

Like it or not, someone is keeping track of your ability to manage credit. Let’s fix this: Three companies track your credit: TransUnion, Equifax, and Experian.

At the request of lenders (and sometimes borrowers), these companies put together credit reports that describe any loans you’ve ever taken, your payment history, and the amount of credit you’ve been approved for, even if you haven’t. not use it. Because a credit report sets out your creditworthiness and the likelihood of you paying your mortgage on time, lenders rely on it – and a credit score – to decide whether or not to approve your loan application.

Just like a credit report, your credit score plays an important role in your ability to get a mortgage. By simply looking at your credit score, banks and mortgage companies make assumptions about the risk of loaning you money. Scores can range from 300 to 850 points, with “good scores” somewhere in the middle.

Some lenders report that a score of 600 is average. Others say you have to be at 700 to be considered good. Even if your credit score is in the low to medium range, there are loan products to consider.

Get pre-approved (before attending open days)

Unless you’re considering making a cash offer, finding a home without first getting approved for a mortgage is just snooping around other people’s homes. Pre-approvals show you are serious.

A pre-approval is a written estimate of how much home you can afford and how much debt you can owe. Pre-approvals are much stronger than a pre-qualification letter, which is really just an estimate of what you can afford based on what you put in your application.

Once a lender has determined the amount they are willing to lend you and verified your income and asset documents, you will receive a pre-approval letter indicating the amount. Some real estate agents won’t even agree to work with a client unless they’ve been pre-approved.

Not only does a pre-approval save you time, it’s also a great bargaining chip when buying in a competitive market.

Your pace

When the weather gets warmer, people start looking for a home. Of course, it differs depending on where you are looking to live, but spring tends to be busy in general. The high volume of home purchases usually continues into the summer as some people want to move into a new home before starting the school year.

While the competition can be fierce and stocks a bit tighter, don’t be afraid to jump in if you find the right home at a reasonable price, especially if you’ve been pre-approved.

If you can organize yourself during the summer, work with a good real estate agent to identify communities that interest you and keep in touch with your loan officer. If you can’t find a home right away, that’s okay. It might be a good idea to calm down until early fall. This is when the number of properties available on the market is relatively high – compared to other times of the year – and sellers may be more eager to close a deal before the approach of. Winter.

Of course, that might not be true for you. The factors influencing property prices can be extremely local. You might find more competition for a specific property while others nearby remain unsold for even longer.

Remember to keep in touch with your lender to determine how much home you can afford, then ask your real estate agent to show you only the homes that make sense to you and your budget. The last thing you want to do is fall in love with a house you can’t afford or can get approved for.

Buying a home doesn’t happen overnight. Allow time for your due diligence up front and there will be fewer issues along the way. Start early and you could be enjoying your new home on a long day.

Why does my credit score change so often?


Credit ratings are often thought of as static numbers that only change when you have a credit event, such as a request for credit or a payment overdue of more than 30 days.

In fact, credit scores can change frequently, especially for people who are heavily involved in credit. The reason why? Credit scores are calculated from information in your credit file, also known as credit report, which is constantly evolving.

Lenders, credit card companies and the banks you do business with update your Account Status by sending information to Experian and the other two credit bureaus, Equifax and TransUnion, about every 30 days.

Your account status is a record of how you manage your account, such as whether you paid your account on time and how much you paid. Your account status may also reflect negative activity, such as whether you’ve paid late – and how late (30, 60, or more than 90 days late).

Whenever your credit report changes with new monthly account status updates, your credit score can also change, up or down, depending on the data.

Example scenario

Let’s say you have a credit card with a credit limit of $ 2,500 and you buy a big screen TV for $ 2,000. Your credit card company will report your account balance as $ 2,000, so for a while your account will be “heavily used,” meaning you are spending near your credit limit.

The ratio of your balance to your credit limit is called credit utilization rate, or the credit utilization rate, and it is ideal for most credit scores to keep it at 30% or less.

In this example, the usage is higher than that (80%), which could lower your credit scores.

The good news is that as soon as the payments on this account decrease the outstanding balance, so that the account is not used heavily, your credit scores will most likely improve.

This article first appeared on Experian.com and was syndicated by MediaFeed.org.

How much do you need for the retirement of your dreams


Retiring doesn’t automatically mean you’ll spend less money.

People often underestimate the cost of their ideal retirement, according to author Dan Ariely, professor of behavioral economics at Duke University.

Being tied to a desk all day can make it harder to spend money, Ariely said. In retirement, the new hobbies and activities you choose to fill your free time will eat into your fixed income.

The bestselling author conducted a study that found that most people expected to have to replace about 75% of their salary to fund their retirement.

The researchers then calculated how much respondents would need based on their planned lifestyle. The numbers were a long way off, Ariely said.

Watch this video to learn what percentage the same people actually need and how to start saving more for retirement.

More Investing in you:
What your FICO score means and why you need to be careful
Josh Brown: How I Explain the Stock Market in Relation to the Economy
How insurance premiums and deductibles work

SUBSCRIBE: Money 101 is an 8-Week Financial Freedom Learning Course, delivered weekly to your inbox.

CHECK: Growing up with Acorns + CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.

Can Payday Loans Become Obsolete? With $ 15 million more, Clair wants to find out – TechCrunch


The world seems to go faster every year, and yet nothing seems slower than the speed at which paychecks are distributed. In the United States, work done the day after a pay period will take just two weeks to process, with a check or direct deposit arriving a week or two later. For the tens of millions of employees who live paycheck to paycheck, that weeks delay can mean the difference between a rent check – or not.

Various startups have approached this problem with different solutions, and Clair is one of the newer and more compelling offerings.

Using its own capital base, based in New York Light offers instant and, most importantly, free salary advances to workers by integrating with existing HR technology platforms. It works with full-time employees as well as co-workers, and it offers a suite of online and mobile apps for workers to make sense of their finances and request an advance on earned wages.

The company was founded in late 2019 by CEO Nico Simko, COO Alex Kostecki and CPO Erich Nussbaumer, and today the company announced that it has raised $ 15 million in Series A funding led by Kareem Zaki of Thrive Capital. , who will join the directors council. Just a few months ago, Clair announced a $ 4.5 million funding round led by Upfront Ventures, bringing its total funding to $ 19.5 million.

“Payday advance” or “earned payday advance” (there is a slight distinction) has been Silicon Valley’s euphemism for payday lending, an industry that has been plagued by allegations of fraud, deception. and rapacious greed that distracted workers from their hard work. – paychecks earned thanks to usurious interest rates.

What sets Clair apart is that its offer is free for workers. Since it connects directly to HR systems, the startup takes much less financial risk than traditional payday lenders, who don’t have access to the payroll data Clair is able to analyze.

For Simko, one of his goals is simply to see the complete elimination of the traditional industry. “I have a payday lender right across from my apartment in Brooklyn and there’s a long line on the 25th of every month, and I’m not going to stop until that line is gone.” , did he declare. “Success for us is simply to become the winner of access to earned wages. “

He is Argentinian-Swiss and came to the United States to study at Harvard, where he met Nussbaumer. He ended up working at JP Morgan focused on the payments market. He has kept in touch with Kostecki, their families are good friends, and the trio decided to tackle this issue, in part inspired by Uber’s instant checkout feature that he introduced in 2016 and which has met with great success.

Clair Founders Alex Kostecki, Nico Simko, Erich Nussbaumer. Image credits: Light

Instead of making money on interest rates, fees, or tips, Clair instead wants to be the banking and financial service provider of choice for working people. As I noted last week about Pinwheel, a payroll API platform that owns the direct deposit relationship with a worker, but guarantees that they will do the vast majority of their financial transactions through that account. particular banking.

Clair offers free instant paychecks as a gateway to its other offerings, which include spending and savings accounts, a debit card, in-app virtual debit card, and financial planning tools. Simko said, “Our business model is to give people free access to the salary they earn, then automatically enroll them in a digital bank, and then we make money the same way Chime makes money, at find out the interchange fees. “

In fact, he and the company believe in this model so much that it will actually pay human capital technology platforms such as workforce management and payroll systems to integrate with Clair like an incentive. It provides a source of recurring revenue for HR tools based on the number of users who join Clair, regardless of the amount of software use by those workers. We are “really digging deeper into the integrated fintech thesis,” said Simko. “Employees start spending money on their Clair card, and we redistribute it to our [HR tech] the partners.”

Clair joins a number of other companies in this space, which is becoming more and more passionate as the perceived opportunity in financial services remains high among investors. Last year, the Gusto payroll platform announced that it would be moving from a simple payroll to a financial wellness platform, which is partially based on its Instant Pay Advances or what it calls Cashout. . We’ve covered Even, which is one of the originals in this space with a major partnership with Walmart, as well as neobank Dave, which offers payday advance features with a tip income model. Dave comes from announced a $ 4 billion PSPC with VPC Impact Acquisition Holdings III.

Nonetheless, Clair’s angle is differentiated as the race to lock everyone in the world with new financial services intensifies. Simko says he sees a gargantuan opportunity to be America’s “Alipay”, noting that unlike China with Alipay, Nubank in Brazil and increasingly in Latin America, and N26 and Revolut in Europe, he There is still an opportunity for a complete neobank to conquer the American market.

With this new financing, the company will continue to expand its product offering, exploring areas such as healthcare and debt repayment. “I can give the APR not based on their credit score, but based on their employer’s credit score, which is the multibillion dollar idea here,” Simko said. The team is nominally based in New York City, with around half of the team of around 25 people.

This is the main reason why payday loans are so dangerous


Image source: Getty Images

Payday loans are expensive and come with very high fees that need to be repaid in a short period of time. In fact, you could end up paying an effective APR of over 400% if you take out a payday loan.

Despite this drawback, many people still use payday loans. And there are valid reasons for that. Occasionally, do not having the money that a payday loan can provide could have worse consequences than paying the loan costs. For example, if a payday loan saved you from eviction or repossession of your vehicle and that was your only option, then taking out the loan might have been a good decision.

But while there are some circumstances where you can justify paying high fees to borrow through this method, it’s important to keep in mind that it’s not the one-time fees that make payday loans so dangerous. It’s the vicious cycle that forces you to borrow more and more money. Keep reading to learn more.

The Payday Debt Cycle

The major problem with payday loans is that you have very little time to repay the entire amount you owe. In fact, you usually only have a few weeks at most to determine the total value of the loan. This is a far cry from traditional personal loans, which you can repay over several years.

Unfortunately, if you’ve been forced into taking out a payday loan, chances are you’re already financially stretched thin. Taking out this type of loan means you’re committing a future paycheck to making a large lump sum payment, which could land you in a whole lot more trouble.

Once payday arrives, you may not have enough money to cover the full cost of the loan so soon. This is especially true for people who haven’t had much time to catch up with the financial crisis that caused them to need the payday loan in the first place.

If you cannot cover the loan, you may have to borrow again and pay a second expensive fees. People who use payday loans usually keep falling further and further behind in this way, with the fees adding up to a veritable fortune.

Even if you can paying off the loan immediately will likely eat up a good chunk of your check. When this happens, you could soon find yourself out of funds soon after and thus take out another payday loan. Plus, it means paying the hefty fees a second time – and possibly a third, fourth, etc.

Basically, the problem comes down to the fact that you are incurring future income to cover a current crisis plus payday loan fees. This increases the likelihood that you will be trapped in a continuous cycle of costly payday debt. That’s why the Consumer Financial Protection Bureau found that most short-term loans ended in a reborrowing chain of at least ten loans.

What can you do to avoid this cycle?

Ideally, you can avoid payday loans so you don’t get trapped in this cycle. You can prepare for this by saving an emergency fund. Your tax refund or stimulus checks could serve as a starting point for this fund and give you at least some cash for surprise expenses.

If you can not save an emergency fund, then consider other options such as alternative payday loans from credit unions. Compared to a payday loan, these come with lower fees and longer repayment periods.

But if you need to take out a payday loan, do everything you can to avoid borrowing again, even if you have to work on the sidelines or reduce your expenses before the repayment is due. This way you can avoid going into further debt.

You can also consult government resources that could help you deal with a financial crisis. And if you find yourself in a reborrowing cycle, know that you’re not alone – you’re one of many trapped in a vicious circle. For more resources and ideas to help you avoid payday loans, check out our guide on how to pay off your debt.

The best credit card cancels interest
If you have credit card debt, transferring it to this superior balance transfer card can pay you 0% interest for 18 months! It’s one of the reasons why our experts rate this card as a top choice to help you control your debt. This will allow you to pay 0% interest on balance transfers and new purchases during the promotional period, and you will not pay any annual fees. Read our full review for free and apply in just two minutes. We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More startups and venture capitalists are banking on subprime lending alternatives – Crunchbase News


Fintech startups are increasingly looking into loans for more than a third of Americans with subprime credit scores. Their vision is to turn a negative connotation into one that not only helps short-term borrowers, but builds their credit and provides financial education.

Subscribe to Daily Crunchbase

The term “subprime” is generally applied to a borrower with less than perfect credit and a FICO score below 670, a category that 34.8% of Americans fall in, according to the credit bureau Experiential. (FICO is the abbreviation of Fair Isaac Corp., the first company to offer a credit risk model with a score.)

People in this category tend to have few borrowing options other than a subprime lender, which can lead to a cycle of debt, according to Josh Sanchez, co-founder and CEO of the financial application FloatMe.

“The big problem is that there is no alternative to payday loans,” Sanchez told Crunchbase News. “Overdraft fees are also a huge problem. Even during the pandemic, banks were charging overdraft fees knowing people were losing their jobs. “

In 2019, about 37% of Americans said they didn’t have enough to cover an emergency expense of $ 400, according to the Federal Reserve.

And when they are in an emergency, there aren’t many places people can get help with a loan, according to Nathalie Martin, Professor and Frederick M. Hart Chair in Consumer and Clinical Law University of New Mexico School of Law.

“Studies have shown that people don’t shop, mainly because of the desperation involved and the fact that there isn’t much of a difference in the price of payday loans,” Martin said in an interview.

She sees two problems with current loans: loan fees are often high compared to the loan – think of the $ 50 fee for a $ 100 loan – and people often get caught in a “debt trap” where they continue to pay these fees and never actually reimburse. the principal of the loan, resulting in a much higher payment than the one originally borrowed.

Borrowers who are desperate for money often don’t look closely at the cost of the loan when looking for a lifeline, she said, only to realize that they are paying it back how bad it really is. Dear.

Invest in new methods

Since 2017, more than $ 94 billion has been invested in U.S. companies focused on financial services, according to data from Crunchbase. Between 2019 and 2020, funding increased by 29%, although the number of investments fell by almost 13%. So far in 2021, $ 19.5 billion has been invested in the sector.

Over the past six months, venture capitalists have funded a number of startups focused on alternatives to payday lending and financial literacy, including FloatMe, which in December raised a seed capital of 3. $ 7 million led by ManchesterHistory.

Other recent U.S. investments in space include:

Latin America has also become a hot market for innovative startups in the consumer loan category. Based in Mexico Graviti earlier this month, we raised $ 2.5 million in a funding round led by Active capital to develop a buy now, pay later concept aimed at millions of low-income, unbanked families in Latin America for whom purchasing household appliances is difficult.

Baubap, a mobile lending platform also based in Mexico, in March closed a $ 3 million growth round of Mexican financial services company Grupo Alfin for its proprietary technology to boost financial inclusion and education . And last November, Monashes and ONEVC led a $ 5 million funding round in a Brazilian fintech startup Facio, which is developing a financial education platform that not only offers free lectures and classes, but also payday advance services.

See the success of companies, such as Carillon, who serve risky borrowers has been an important driver for investment, said Rebecca lynn, co-founder and general partner of Canvas companies.

“I’ve seen a lot of people tap into apps that help you get your money two days early, as well as more real-time access to funds to pay bills when they get them,” Lynn told Crunchbase News. “You don’t wait for a payroll cycle, there is a cash subscription made possible by companies like Plaid, and it’s much cheaper for service users.

Lynn has spent 20 years in the credit industry, going through several cycles. She warns other investors that subprime is a dangerous category and that companies should choose companies wisely based on how transactions actually go.

In 2019, Canvas invested in Financing possible, a Seattle-based company that helps people with little or no credit history access credit and improve their financial futures “without being predatory,” Lynn wrote in her blog post.

“Possible worked well in COVID, which tested it under pressure,” she added.

Exchange cash flow for credit

Sanchez himself had his own problem with payday loans: he was in a car accident and didn’t have a credit card, so he took out a payday loan which ended up putting him in trouble. financial.

This prompted him and two co-founders to launch FloatMe in Austin in 2018 to provide interest-free, credit-free “floats” of up to $ 50, account monitoring to avoid overdrafts, and tools. savings and education.

If more people like Sanchez, who have experienced the negatives of payday loans first-hand, entered the lending space with transparency and education, that would be good for the industry, Martin said.

“We have a chance to make this work for people,” she added.

Sanchez found that when a person qualified for a $ 200 cash advance, even though a person didn’t need the full amount, they often accepted it, but then ended up in a $ 200 hole when interest and fees were piling up. Instead, smaller amounts – think $ 20, $ 30, or $ 50 – are easier to repay, he said.

“The solution proves that even a small amount can make a difference,” he added. “It could mean being able to put gas in your car or pay the minimum payment on a credit card or buy food.”

Over the past three years, FloatMe has processed nearly a million of its little “floats,” which use cash flow underwriting as the basis for lending against the traditional credit rating, which is not ” one size fits all, ”Sanchez mentioned.

The cash flow method means the business looks at the borrower’s spending the day before and the day after someone’s payday and the income that comes in. This method has allowed FloatMe to make good decisions and trust a model that can complement credit. scores, he added.

FloatMe plans to expand beyond helping consumers with their cash flow shortages, Sanchez said. The company has a budgeting feature in the works which will be released in late May and is exploring other revenue opportunities for users. It may also offer credit products in the future.

“The biggest expenses a person has are rent and bills, which leaves a bit of capital for the rest of the month,” Sanchez said. “It’s difficult to get out of this situation. We need to do better as an economy to unlock the income potential and contain the rising cost of living. “

Regulatory approach

When the president Joe biden took office in January, one of his stated priorities was investigating payday loans, suggesting that the Consumer Financial Protection Bureau would like become a “consumer watchdog” under his administration.

Nominated biden Rohit chopra, who spoke about fight against credit abuse, at the highest post in the office.

America’s credit and loan problems will not be easy to resolve, Lynn said. She has seen different incarnations of the payday loan concept, including some that offer interest-free loans but with subscription fees.

There should continue to be options for consumers who live paycheck to paycheck to manage and improve their finances, coupled with financial literacy education, she said.

“If all the credit options were taken out, it wouldn’t allow someone to grow,” Lynn said. “Companies must also provide credit in a transparent and ethical manner. “

The interest rates for payday loans are regulated at the state level. This means that it would be difficult for the federal government to set an interest rate cap, even if a federal cap would be one way to fix the problem, Martin said. The CFPB has created rules for lenders, including the “2017 Rule,” which prohibited lenders from debiting a borrower’s account under certain conditions, and required lenders to determine whether borrowers could repay their loans.

Another would be to give the CFPB more power to investigate lenders.

“Some of the small loans may have higher interest rates and require a higher cap, but there could also be solutions like a waiting period between loans or limitations on the number of loans a person could. contract for a period of time, ”Martin added. “It’s also time to start thinking about how we might regulate the new products on offer. “

Crunchbase Pro queries listed for this article

The query used for this article was Funding of U.S. financial services companies since 2017, in which “financial services” was the industrial group and companies headquartered in the United States. This list includes businesses identified as financial services, but also includes businesses in other categories, such as insurance, energy, fraud detection, and software.

All Crunchbase Pro queries are dynamic and the results update over time. They can be matched with any business or investor name for analysis.

Drawing: Dom guzman

Keep up to date with the latest rounds of fundraising, acquisitions and more with Crunchbase Daily.

9 alternatives to payday loans to save you exorbitant fees – Forbes Advisor


Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

If you need money quickly to cover an emergency or essential living expenses, you might be tempted to take out a payday loan.

These loans are often easy to get – some lenders won’t even check your credit score. However, due to their exorbitant fees, which can amount to annual percentage rates (APR) as high as 400%, you should avoid this type of loan. You should only use it as a last resort.

Consider one of the nine payday loan alternatives below to keep more of your hard-earned cash.

1. Apply for an alternative payday loan

Some federal credit unions offer Alternative Payday Loans, which are loans designed to provide a lower cost alternative to payday loans. With this option, you can borrow up to $2,000 and the term of the loan varies from one to 12 months. The maximum interest rate is 28%, which is much better than what you usually see on a payday loan.

For example, here is an overview of the maximum percentage rate allowed for payday loans by state based on a $100 loan over 14 days.

To qualify for an alternative payday loan, you must be a member of a federal credit union that offers this type of loan.

2. Borrow from a credit union

Unlike traditional banks, credit unions are member-owned, not-for-profit institutions. For this reason, you may find cheaper rates at a credit union for credit union personal loans and other types of loans. Additionally, credit unions generally have less stringent eligibility requirements than traditional banks, so you may qualify to borrow money with less than stellar credit.

Like an alternative payday loan, this option requires you to be a member of a credit union.

3. Apply for a bad credit loan

If your credit score falls within the fair credit score range (580 to 669), according to the FICO credit score model, you may qualify for a bad credit loan. Lenders who offer bad credit loans may approve applicants with credit scores as low as 580. To qualify for a loan with a score below 580, consider using a co-borrower or co-signer, if the lender allows it.

In addition to your credit score, lenders will base your eligibility on other factors, such as your income and debt-to-income ratio (DTI). Although you probably won’t get the best interest rate with a fair credit score, lenders usually have a maximum interest rate in the mid-30s. that you would get with a payday loan.

Before applying, prequalify with multiple lenders, if possible, to get an idea of ​​the interest rate and terms of your loan before you apply. Be prepared to provide personal information, such as your income, Social Security Number (SSN), and date of birth when you complete the official application process.

4. Form a Lending Circle

To help pay for future unexpected expenses, consider forming a lenders’ circle. A lender’s circle is where a group of people set aside a certain amount of money each month and pool it together. According to the loan agreement, one member can borrow the full amount one month, while another can borrow the full amount later.

You can join a Lending Circle online or create a Lending Circle with family and friends. Some online lending clubs report member payments to all three credit bureaus, which can improve your credit score.

5. Borrow from friends and family

Another way to avoid the high interest rates and fees of payday loans is to ask family members for family loans or borrow money from friends. It may also be easier to get the money you need since you don’t have to go through the official application process.

Once the family member or friend agrees, you need to create a loan agreement, which should include repayment terms and the interest rate (if applicable). An important note: Repay the loan on time to maintain a healthy relationship with the family member.

6. Get help with bills through payment plans

If you’re having trouble paying your bills, ask the supplier if you can set up a payment plan. This way you can avoid having to pay the bill in one installment. Some lenders may have a forbearance or deferment program in place to help you get through the tough times.

With this option, keep in mind that you will likely have to pay interest and fees. However, the interest and additional fees may be worth paying if they help you avoid taking out a payday loan.

7. Create alternative ways to earn money

Increasing your income could save you from taking out a payday loan. Although making more money is easier said than done, plenty of opportunities exist both online and offline. Some online opportunities include freelance writing, conducting surveys, and beta testing apps and websites. Offline opportunities include driving for DoorDash or Uber, selling used items at a garage sale, and working part-time on the side.

8. Use a credit card responsibly

Another way to avoid the high interest charges and fees of a payday loan is to use a credit card responsibly. This means using your credit card only for purchases that you can afford to repay by the due date. Paying your balance in full on or before the due date can help you completely avoid interest charges, late fees, and possible damage to your credit score.

Also, if you have a credit score of 700 or higher, you may qualify for a 0% APR credit card. This type of card comes with an interest-free promotional period that lasts up to 21 months. As long as you pay the balance owing before the promotional period expires, you can avoid interest. Thereafter, the remaining balance will accrue interest charges until it is fully paid off.

9. Apply for financial aid programs

Depending on your income, you may qualify for financial assistance programs in your area. Some programs may provide rent assistance, while others may help pay for food and other expenses. To find these programs, consider contacting your local library or chamber of commerce.


If you want to avoid the exorbitant costs associated with a traditional payday loan, choose another financing option from this list. Compare each option and assess which is best for your specific situation. The most cost-effective option you qualify for is probably the one that’s right for you.

TitleMax challenges Dallas’ new payday loan ordinance

Law360 (April 13, 2021, 9:18 p.m. EDT) – TitleMax on Friday asked a Texas state court to ban the city of Dallas from applying new restrictions on payday loans and repayment plans, arguing that the city exceeded its authority by passing an ordinance intended to help its citizens avoid predatory lenders.

TitleMax of Texas Inc. and lenders Ivy Funding Co. LLC and NCP Finance LP claim in a Dallas County District Court lawsuit that an amended order, unanimously approved by Dallas City Council in January, is preempted by state law and violates the legal and due process provisions of the constitutions of Texas and the United States, respectively.

The prescription is …

Stay one step ahead

In the legal profession, information is the key to success. You need to know what’s going on with customers, competitors, practice areas, and industries. Law360 provides the intelligence you need to stay an expert and beat the competition.

  • Access to case data in articles (numbers, filings, courts, nature of prosecution, etc.)
  • Access to attached documents such as briefs, petitions, complaints, decisions, requests, etc.
  • Create personalized alerts for specific articles and topics and more!


financier Wahlroos bets on payday loans via investments in tax havens | Yle Uutiset

Björn Wahlroos, chairman of the financial giant Sampo Group and the forestry company UPM-Kymmene.

Image: Jarno Kuusinen / PDO

Finnish bank tycoon Björn ‘Nalle’ Wahlroos has invested more than 140 million euros in Luxembourg companies, according to a database compiled by journalists for a French newspaper The world.

Wahlroos, chairman of the financial giant Sampo Group and of the forest industry company UPM-Kymmene, is a shareholder in at least five Luxembourg companies, three of which are listed as owners. Wahlroos has also invested in UK payday lending firm Auden Group Limited, the data shows.

Hundreds of Finnish companies and individuals have embarked on asset management in tax havens in Luxembourg, according to an investigative report by Yle MOT, who reviewed the list.

Other Finns who transferred financial assets to Luxembourg include Ilkka Herlin, heir to the Kone fortune but not involved in the family business, former chairman of Nokia Jorma Ollila, former CEO and President of Sampo Kari Stadigh and the Ehrnroot family.

Although the database also includes Mafia-owned companies and businesses associated with money laundering, there are currently no signs of unsavory deals from the Finns mentioned in the story.

A European tax haven

Luxembourg has long been considered a more “acceptable” tax haven than Panama or the British Virgin Islands. The ability for companies to make favorable deals with the aim of claiming tax breaks, a system that favors profit shifting and the discretion offered by the country have made Luxembourg attractive to many investors.

In the Grand Duchy, which has only 600,000 inhabitants, nearly 90% of businesses are currently owned by non-Luxembourgers.

member of the European Parliament Eero Heinäluoma (SD), who acts as a replacement on the tax matters subcommittee, called the database’s findings “shocking.”

“Luxembourg has been caught engaging in questionable financial activities in the past. The country has promised to change its practices, and to some extent it has,” Heinäluoma told Yle, adding that some of these practices had been replaced by new ways of avoiding taxes, resulting in lost income across the European Union.

“Luxembourg is not doing this in a vacuum, their actions affect the other 26 member states. The loss of tax revenue is in the order of one billion euros,” Heinäluoma explained, adding that he hoped that the members of the European Union will unite to fight for more transparency.

“When some refuse to contribute, others have to make up for the loss. With heightened awareness, the pressure on these countries will increase and their practices will become unsustainable,” he said.

Hang In, Illinois, And Cap Interest Rates At 36% On Payday Loans | Editorial


Six years ago, Downstate Springfield woman Billie Aschmeller took out a short-term loan of $ 596 with an insane annual interest rate of 304%. Even if she repaid the loan within the two years required by her lender, her total bill would exceed $ 3,000.

Soon after, however, Aschmeller fell behind on other basic expenses, desperately trying to keep up with the loan so as not to lose title to his car. Eventually, she ended up living in this car.

Aschmeller regrets ever taking the payday lending and car title lending route, with his high interest levels on wear and tear, though his intentions – to buy a winter coat, a cradle and a seat self for her pregnant daughter – were understandable. She is now a staunch advocate in Illinois for cracking down on a small, short-term loan industry that in every way has left millions of Americans like her only poorer and more desperate.

For years, as she told the legislature, she felt “like a hamster on one of these wheels”.

A bill awaiting Gov. JB Pritzker’s signature, the Illinois Predatory Loan Prevention Act, would go a long way to ending this type of exploitation by the financial services industry, and there is no doubt that the Governor is will sign. The bill, which would cap interest rates at 36%, enjoys strong bipartisan support. It was approved unanimously in the House and 35-9 in the Senate.

But two hostile trailer bills – HB 3192 and SB 2306 – have been introduced in the legislature, which would significantly weaken the Predatory Lending Prevention Act, defeating much of its purpose. Our hope is that these two bills are not going anywhere. They would create a loophole in the way the annual percentage rate is calculated, allowing lenders to charge additional hidden fees.

Between 2012 and 2019, as recently reported by the Chicago Reader, over 1.3 million consumers have taken out over 8.6 million payday, auto and installment loans, for an average of more than six loans per consumer. These loans typically ranged from a few hundred dollars to a few thousand, and they carried average annual interest rates – or APRs – of 179% for auto title loans and 297% for payday loans.

Some 40% of Illinois borrowers – an unusually high percentage that underscores the unreasonableness of the burden – ultimately fail to repay these loans. More often than not, they find themselves caught in a cycle of debt, with old loans turning into new ones. At the national level, the Consumer Financial Protection Bureau finds nearly one in four payday loans are borrowed nine or more times.

Studies have shown that payday loan borrowers often fall behind in paying other bills, delay spending on medical care and prescription drugs, and go bankrupt. They are also very often people of color. Seventy-two percent of Chicago payday loans come from black and brown neighborhoods.

The Predatory Loan Prevention Act, an initiative of the increasingly assertive Legislative Black Caucus, would cap interest rates on consumer loans below $ 40,000 – such as payday loans, installment loans and mortgage loans. automobile title – at 36%. This is the same interest rate cap imposed by the US Department of Defense for loans to serving members of the military and their families.

Critics of the bill, i.e. lenders and their associations, insist that they only provide reasonable service to people who find themselves in the worst conditions, desperate to have money. money and nowhere to turn. No bank or credit union, the lenders point out, would provide loans to such high-risk customers.

But in states where triple-digit interest rates on payday loans and auto loans have been banned, studies have shown people are turning to other – and better – alternatives. They use their credit cards, which have lower interest rates. They ask their family and friends for help. They accumulate more savings. And most of all, apparently, they’ve cut back on their spending.

There are also institutional nonprofit lenders in Illinois, such as Capital Good Fund and Self-Help Federal Credit Union, ready to provide small loans at rates below 36%.

Seventeen states and the District of Columbia have already capped interest rates at 36% or less on payday loans and auto titles. In the service of greater racial fairness – and to strike a blow against structural racism, which is really what it is – Illinois should do the same.

Send letters to [email protected].

Explanation of Payday Loans: What does it mean?


The annual percentage rate (APR), for payday loans, is calculated by dividing interest paid by amount borrowed by multiplying result by 360, then dividing that number in days by the repayment term and multiplying by 100. For example, $ 15 per $100 borrowed is for a 2-week loan. The APR is = ((15/100(x365)/14) = 391%

Why is it that payday loans have such high interest rate?

While the Criminal Code of Canada prohibits annual rates exceeding 60%, 2007 modifications to the Code exempt payday lenders rules.

Payday loans that are less than $1,000 must be exempt. They must also be for short-term purposes (for example, for less then 62 days) and must be taken in provinces where there is legislation to protect payday loan recipients. A real payday loan for bad credit is another way to borrow money.

Because the Criminal Code amendments allow the provinces to determine the maximum borrowing limit for payday loan loans, borrowers may be subject to very different interest rates depending on their location. Rates for the nine provinces with active payday loan businesses vary from 391% per calendar year in five provinces to 548% annually in Newfoundland Labrador. This is the most recent province that regulates payday lenders.

Quebec has a maximum interest rate of 35% for payday loans, which is lower than the 60% limit in Canada. Quebeckers cannot borrow from payday lenders who do not have physical presence in their area. Quebec Consumer Protection Act mandates that lenders must be licensed to operate within the province. Quebec courts have ruled not to grant licenses if the creditor requests less than 35% annually because the loan is otherwise considered “unreasonable”.

The 2007 amendments to the Criminal Code were made after the Canadian Payday Loans Association, formed in 2004, successfully lobbied for the change.

Prior to the Criminal Code amendments and subsequent regulation by the provincial governments, payday lenders operated within a legal gray zone. Payday lenders do not fit within the traditional “four pillars”, which include banks, trust companies or insurance companies. Payday lenders, who were operating in contravention of the law, feared being subject to regulation or even sued when the industry developed in the 1980s/90s. interest of The Criminal Code. – rate limits.

Payday lenders had to be allowed to continue to exist legally in order to survive. Olena Kubzar, a York University social sciences professor, completed her doctoral thesis regarding payday loans in Canada. That meant that some regulations had to be adopted. The regulations were then passed by the federal government, who was then required to amend the Criminal Code which made payday lending illegal.

Bill C-26, which was introduced to Congress in October 2006 and adopted in May 2007, contained amendments to the Criminal Code. Payday loan amendments were quickly approved without consultation to allow for provinces to use the amendments to the Criminal Code of 1995.

Payday Loan Use Rises Amid COVID-19 Pandemic, New Investigation Finds


TORONTO – Due to the COVID-19 pandemic, more people are using the services of payday and installment loan companies, which charge higher fees and interest rates than traditional banks , according to an anti-poverty group.

Acorn Canada held protests in nine different cities across the country, including Toronto, on Wednesday to raise awareness of what it calls “predatory loans.”

According to a survey conducted by Acorn, 80 percent of those who took out payday loans did so to pay for daily living expenses such as rent, groceries and electricity.

Additionally, 40% said they were turned down by a traditional bank before taking out a high interest loan and 17% said they could no longer make payments due to financial hardship from COVID-19.

Acorn said that because of the way payday loans and short-term installment loans are structured, annual interest rates can range from 25 percent to almost 400 percent.

“If you take 40%, 50% or 100% interest on a loan of a few hundred dollars because you have to pay the rent, how are you ever going to get out of this hole? »Djenaba Dayle said with Acorn.

The group said that even though the Bank of Canada has set interest rates at historically low levels, low-income Canadians are not taking advantage.

“Even with the interest rates at their lowest with the Bank of Canada, they still charge these sky-high rates,” Dayle said.

“People are offered more than they need and they think I can maybe make up my bills and you pay for a year or two, and you’re still trying to pay off the loan principal.”

CTV News Toronto made headlines during the pandemic for those who have taken out payday loans and are struggling to keep up with their payments.

Kathleen Kennedy of Hamilton said she borrowed $ 4,300 with an interest rate of nearly 50 percent.

“I realized I had made a very big mistake. The interest rate is outrageous and they are pestering me. I never want to go through this again,” Kennedy said.

Acorn has targeted Money Mart and easyfinancial in the protests. CTV News Toronto has contacted both companies for comment.

An easyfinancial spokesperson told CTV News Toronto: “We are not a payday lender and we totally agree that payday loans, which are small, short-term loans that cost more than 400% in annual interest, are not favorable to consumers.

“Our installment loans have a maximum interest rate of 46% and over the past five years we have strived to improve the cost of borrowing for our clients, which has fallen to an average interest rate of 37%.

The spokesperson added, “Our customers are the nine million Canadians who are considered ‘unprivileged’ based on their credit rating and who are generally turned down by traditional banks. “

Acorn said more needs to be done to protect low-income and vulnerable people from unfair lending practices. Credit counselors say there is a risk of falling into a payday loan model.

As some people pay off one loan, they have to take out another to pay their bills, which can lead to what Acorn calls a sticky debt cycle.

The map shows the typical APR in each state


In recent months, several states have moved to limit interest rates on payday loans in an effort to prevent consumers from getting carried away by these traditionally expensive loans.

In the November general election, voters in Nebraska voted overwhelmingly to cap payday loan interest rates in the state at 36%. Before the ballot initiative passed, the average interest on a payday loan was 404%, according to the Nebraskans for Responsible Lending coalition.

In January, Illinois state legislature passed bill that will also cap consumer loan rates, including salary and car title, at 36%. The bill is still awaiting Gov. JB Pritzker’s signature, but once signed, it will make Illinois the last state (plus the District of Columbia) to cap payday loan rates.

Yet, these small loans are available in more than half of the US states without many restrictions. Typically, consumers simply need to enter a lender with valid ID, proof of income, and a bank account to get one.

To help consumers put these recent changes into perspective, the Center for Responsible Lending analyzed the average APR for a loan of $ 300 in each state based on a loan term of 14 days. Typically, payday lenders charge a “finance charge” for each loan, which includes service charges and interest, so consumers are not always sure how much interest they are paying.

Currently there are a handful of states (shown here in green) – Arkansas, Arizona, Colorado, Connecticut, Georgia, Maryland, Massachusetts, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Dakota of South, Vermont and West Virginia – and DC that cap payday loan interest at 36% or less, according to CRL.

But for states that don’t have a cap rate, the interest can be exorbitant. Texas has the highest payday loan rates in the United States. The typical loan APR, 664%, is over 40 times the 16.12% average credit card interest rate. Texas’ position is a change from three years ago, when Ohio had the highest payday loan rates at 677%. Since, Ohio has placed restrictions on loan rates, amounts and terms which came into effect in 2019, bringing the typical rate down to 138%.

About 200 million Americans live in states that allow payday loans without heavy restrictions, according to CRL. Even during the pandemic, consumers are still looking for these loans with triple-digit interest rates.

The rate of workers taking out payday loans has tripled due to the pandemic, a recent Gusto survey of 530 workers in small businesses find. About 2% of those employees said they had used a payday loan before the start of the pandemic, but about 6% said they had used this type of loan since last March.

While payday loans can be easily obtained in some areas of the United States, their high interest rates can be expensive and difficult to repay. The research carried out by the The Consumer Financial Protection Bureau found that nearly one in four payday loans are borrowed nine or more times. Additionally, borrowers take about five months to repay loans and cost them an average of $ 520 in finance charges, Pew Charitable Trusts reports. This is in addition to the original loan amount.

“In addition to repeated borrowing, we know there is an increased risk of overdrafts, loss of bank account, bankruptcy and difficulty paying bills,” said Charla Rios, researcher at CRL. Other research has shown that the stress of high cost loans can also have health effects, she adds.

“People are financially strained right now and we also know the results and harms of payday loans, so these loans are not a solution at this time,” Rios said.

To verify: Nebraska becomes latest state to cap payday loan interest rates

Don’t miss: The best mortgage credit cards of 2021

11 alternatives to cut down on the cost of cash advances.


If you are in need of money and need cash fast? The prospect of fast and simple payday loans for cash could be seen to be a feasible option. But is it really the only alternative?

The Center for Responsible Lending calls payday loans “predatory” due to the legal reason. The easy access that payday lenders have to obtain cash to pay for their payday generally results in cost of borrowing being at the highest amount. According to the CRL estimate that the average annual cost of payday loans of 391 USD. This %…

The potential danger with payday loans lies in the high interest rates but the possibility of them being renewed could pose a risk. If you’re not sure to be in a position to repay the loan on its due date, you should consider to extend your credit. Consumer Financial Protection Bureau warns that some states allow extensions to payday loans. This is only the cost to lenders when you extend the loan period. When you’re done with the day, you’ll be charged costs for renewals, extensions as well as late fees. However, you’ll be held accountable for the original amount. It could result in an costly cycle of credit.

The advantages of cash-on-payday advances aren’t the only option for people facing financial challenges. Here are eleven another way to consider.

Create an arrangement to pay

If, for instance, you’re faced with the expense of the loan or credit card which makes it difficult to cover the necessary expenses, you should be aware of whether you’re capable of accepting an arrangement. Many card issuers offer hardship programs that permit the user to decrease or even eliminate payments that you’re not capable of making. The issuer may offer to lower the interest rate to help you control your debts.

If you’ve had a great relationship with a client in the past , the lender will be more likely to consider the request with a serious attitude. In any situation, it is important to be forthcoming about the situation.

Then you can make an application for an individual account

While banks are known for their inefficiency and openness however, they also have long procedure, but it is important to consider the nearby bank when in need of cash. If you need cash for a particular requirement, a personal loan from the bank or credit union is a good option and cheaper than payday loan.

“It’s more like a traditional loan designed specifically to provide you the money you need to cover the things you’d like to buy or refinance. You’ll be able set the repayment timeframe,” says Andy. Laino. Financial analyst at Prudential.

There is however no restriction on brick and mortar firms. Online lenders such as SoFi and Earnest allow you to review the terms and rates you qualify for, and without needing to conduct a thorough examination to see the score on your. While these lenders aren’t able to offer instant cash as cash advance loans can be but personal loans could be paid into your bank account within two days after the loan has been approved.

“Personal loan is often the most efficient method to lower debt, particularly for people who have significant medical bills or anticipating home improvements that are reasonable in costs,” Laino explains. “When you’re facing an expense which require more careful evaluation, you must consider the possibility of getting a personal loan. 

Credit card access your home equity

Homeowners could be eligible to get an interest-free credit line that is tax-deductible in accordance with Howard Dvorkin, personal finance expert and director of Debt.com. “For those earning a salary that is stable it could be the most efficient way to get funds quickly,” he says. The average HELOC cost is approximately five percent.

Take care to be aware when using your home as a means to make money quickly. “For those struggling financially, making use from the value of their homes could cause the home to be in danger should they are unable to repay this loan” Dvorkin said.

You can also get the loan to offer an alternative to payday loan.

Some credit unions can provide cash advances in exchange for payday cash advances. These are short-term loans designed to stop people who are consumers from payday loans which are characterized by high interest rates.

The loans are available in amounts ranging from 200 to $1,000, with periods ranging from one and six years. A credit company that offered the loan may charge processing fees that could be as high as 20 dollars per month, according to MyCreditUnion.gov. You must be active at the moment of purchase to be eligible for a APAL. You must also be associated with the institution for more than one month to be eligible.

Pay attention to the fact that loans for payday without collateral could be extremely expensive to pay back. The good thing is that the fees for PAL are fixed at 28% according to the law.

Advances of cash, made in cash are protected by credit card.

Cash advances made with credit cards isn’t the most cost-effective choice however, they are more secure than loans made for payday. Most lenders will charge an advance-type fee, typically around five percent and with at least 5-10. The average rate of interest for advances in cash is 25.

The most crucial thing is to repay the loan if the rate of interest is over the limit for. Contrary to balance transferred or purchase balance that earn interest from the moment you make it when you cash advance with credit card. If you let the balance to remain unpaid every month and you take out a loan to meet short-term requirements may become a credit problem that lasts for a long period of time.

It is possible that you may obtain an advance loan from an employer who is your

Cash advances from your pay will help you with cash flow issues. Certain companies do not offer these kinds of loans, and the terms differ. It’s important to keep in mind that it’s a loan that you’ll need to pay back within the timeframe you’ve made to set.

Make an application to submit an application to Paycheck Advance application. Paycheck Advance application

If you’re planning to include it into your budget, and to earn an income that is stable, you could make use of apps. Companies like Earnin as well as Brigit will reimburse you for the amount you received for no cost. There are no charges however some applications let you make gratuitous tips.

Get an amount of money in your retirement savings (k)

A method of taking advantage of another source of income in your workplace that is not part of your earnings and this is through retirement savings accounts, also known in the form of (401 (k). While the general wisdom advises trying to gain access the account before taking money from an account for retirement, that you could gain from it. an option (401 (k) credit may be an option if you’re in a bind.

The loan you take out through an account for retirement (k) is tax-deductible if you adhere to the regulations applicable. This means that you’ll have to be capable of repay the loan on time or in full when you leave your current position and begin an offer for a new position. The loan isn’t subject to approval to credit, and you won’t be charged a fee for interest on the account that you’ve created. If the loan is repaid within one more than one year repay the loan in one year or less, the effect on your earnings in the coming years is negligible. Be sure to notify your employers that you may not permit you to take a look at the benefits of pension plans (k) while you make repayments on your loan. This can slow your progress toward creating your nest savings plan in order to save for retirement.

Visit an Pawnshop

Pawnshops provide secured loans that don’t require credit checks or an extensive application. The money can be obtained quickly by placing the collateral on a thing that’s worth. After you’ve paid off the loan, as well as any costs within the period you’ve pledged to pay for your collateral , it will be refunded. If you don’t repay the loan on time the collateral you promised to remove. You made a promise to.

Be aware that the amount you are required to pay to the pawnshop may be different. The interest rates range from 12 to 240 percent, subject to rules of your state you reside in. The cost of storage and insurance may be a part or the total amount. This is a benefit if you’re unable to repay the loan and want to end the loan, it’s possible to do it without incurring additional costs or affecting your credit scores.

Use a peer-to-peer lending platform

Peer-to peer loans are a wonderful method of receiving cash faster through the connection of investors through an online loan platform such as LendingClub or Prosper. Investors who use these platforms are able to explore the loan options and pick which one they would like to transfer their money into. In exchange, they’ll be required to make payments for interest. There’s a chance that you’ll have to have to pay an initial fee that is a fraction of a cent.

The rates of interest for loans made through P2P are usually extremely low, particularly when the applicant has credit scores that are good. With LendingClub rates, the range is between 10.68 percent and 35.89 APR for one. The process for applying is usually less complex as compared to traditional banking. P2P loans can offer some other advantages. “A P2P loan can be more entertaining compared conventional banking” Dvorkin adds. Dvorkin.

The can request relatives or close relatives

When you’re contemplating becoming in debt because of the high cost of interest as well as other charges that are excessive is a significant worry, you may be thinking about reaching out to your family member or a friend of yours to seek financial assistance.

It’s not easy to grasp, but it’s an option you can consider if you wish to stay clear of the cost of interest and fees that come to payday loan. Be aware that borrowing from a friend you trust can turn a casual friendship into one that is formal. It is crucial to make sure that you’re able to repay the person whom you borrowed money from as the relationship may be destroyed in the event you fail to adhere to the conditions of the contract. Family members shouldn’t lend the amount they are in a position to.

Biden’s plans for payday loans and crypto take shape | PaymentsSource


With Joe Biden returning to the White House to become the 46th President of the United States, his financial regulatory agenda is already moving forward, depending on who he chooses to fill in key roles.

Biden’s appointments of Rohit Chopra to head the Consumer Financial Protection Bureau and Gary Gensler to head the Securities and Exchange Commission put two consumer advocates front and center to reverse incumbent President Donald Trump’s deregulation while strengthening oversight cryptocurrency and payday loans.

Chopra, commissioner of the Federal Trade Commission, was the deputy director of the CFPB and helped found the office championed by Sen. Elizabeth Warren, D-Mass. Biden also named Gensler, the former chairman of the Commodity Futures Trading Commission. , to be chairman of the SEC. Both Chopra and Gensler have careers in government that tie them to Obama-era reforms and regulations that followed the 2008 banking crisis.

As Warren’s ally, Chopra will face one of the most contentious confirmation hearings in the Biden cabinet, but Democratic wins in the Georgia playoffs are making his path to the CFPB’s top job relatively easier. Additionally, Chopra has already been confirmed to his current position at the FTC and can serve at the CFPB on an interim basis.

Greater regulation of financial services will certainly result from the 2020 election, but the ease of confirmation hearings will go a long way in determining how aggressive the Biden administration can be.

The CFPB was heavily deregulated during the Trump years, with the Republican administration getting a key Short Supreme victory giving the White House more control over the management of the CFPB. The Trump administration has also backed off payday loan regulation designed to prevent borrowers from going into debt that they could not repay.

write for PaymentsSourceChristopher Peterson, director of financial services for the Consumer Federation of America, argued that canceling payday loans was hurting consumers, calling for restrictions on interest rates.

Additionally, companies that provide early access to salary have become popular during the pandemic and subsequent financial crisis, and address many of the same consumer financial stresses that often drive payday lenders, providing a potential alternative to payday loans. Capital risk flocked to early wage access companies in anticipation of the trend continuing.

Chopra will likely push to reinstate Obama-era payday loan rules, while the CFPB will retain its centralized leadership structure rather than the decentralized structure favored by Republicans. Chopra, who has served as a member of the Consumer Federation of America, will likely focus on many of that association’s priorities, said Eric Grover, director of Intrepid Ventures.

“Payday loans and subprime consumer loans are always high on activists’ wish lists,” Grover said, adding that there may also be more scrutiny of cryptocurrency-related projects. like Diem, the Facebook-affiliated stablecoin project formerly known as Libra. Libra has long been subject to regulatory heat from liberals and conservatives around the world.

Crypto under scrutiny

Acting as commissioner of the FTC, in 2019 Chopra joined UK Information Commissioner Elizabeth Denham, the European data protection supervisor and other international regulators in calling for libra to be scrutinized. Gensler’s appointment as head of the SEC could be bad news for Ripple, as people in the past has said initial coin offerings should be regulated as securities, a position that puts the SEC at odds with Ripple’s stance that XRP is a utility. people also worked on cryptocurrency technology at MIT and is a proponent of strong cryptocurrency regulation.

“In the past, the CFPB has warned of the risks of cryptocurrencies,” Grover said. “If they become more mainstream, if Diem launches, expect the CFPB to do more.”

A push to cut payday loans could open up opportunities for fintechs that offer payroll flexibility without creating the compounding flow of payday loans. Blockchain and AI have emerged in recent years, using faster payment processing and alternative underwriting to issue short-term credit at lower cost.

Chopra’s other top priorities will likely include restoring the Fair Lending Unit and increased enforcement. A regulatory proposal notice will also likely come for open banking, which signals more rules for data aggregators such as Plaid. Visa recently canceled its offer of acquire Posterpartly because of regulatory scrutiny, according to Benjamin Saul, a Washington banking partner at firm Bryan Cave Leighton Paisner.

“The focus will continue to be on consumer ownership of data as well as third-party access to banking information when approved by consumers,” Saul said, adding that the CFPB will likely continue its programs. aimed at encouraging fintech payments and innovation, such as the trial disclosure sandbox. . “However, the success of fintechs pursuing these avenues will depend much more on the bureau’s assessment of the net benefit to consumers of a given product or service.”

Biden’s plans for payday loans and crypto are taking shape

  • For more content like this, from the industry leader in global payments coverage, please visit PaymentsSource.com.

With Joe Biden returning to the White House to become the 46th President of the United States, his financial regulatory agenda is already moving forward, depending on who he chooses to fill in key roles.

Biden’s appointments of Rohit Chopra to head the Consumer Financial Protection Bureau and Gary Gensler to head the Securities and Exchange Commission put two consumer advocates front and center to reverse incumbent President Donald Trump’s deregulation while strengthening oversight cryptocurrency and payday loans.

Chopra, commissioner of the Federal Trade Commission, was the deputy director of the CFPB and helped found the office championed by Sen. Elizabeth Warren, D-Mass. Biden also named Gensler, the former chairman of the Commodity Futures Trading Commission. , to be chairman of the SEC. Both Chopra and Gensler have careers in government that tie them to Obama-era reforms and regulations that followed the 2008 banking crisis.

As Warren’s ally, Chopra will face one of the most divisive confirmation hearings in the Biden cabinet, but Democratic wins in the Georgia playoffs are making his path to the CFPB’s top job relatively easier. Additionally, Chopra has already been confirmed to his current position at the FTC and can serve at the CFPB on an interim basis.

Greater regulation of financial services will certainly result from the 2020 election, but the ease of confirmation hearings will go a long way in determining how aggressive the Biden administration can be.

The CFPB was heavily deregulated during the Trump years, with the Republican administration getting a key Short Supreme victory giving the White House more control over the management of the CFPB. The Trump administration has also backed off payday loan regulation designed to prevent borrowers from going into debt that they could not repay.

write for PaymentsSourceChristopher Peterson, director of financial services for the Consumer Federation of America, argued that canceling payday loans was hurting consumers, calling for restrictions on interest rates.

Additionally, companies that provide early access to salary have become popular during the pandemic and subsequent financial crisis, and address many of the same consumer financial stresses that often drive payday lenders, providing a potential alternative to payday loans. Capital risk flocked to early wage access companies in anticipation of the trend continuing.

Chopra will likely push to reinstate Obama-era payday loan rules, while the CFPB will retain its centralized leadership structure rather than the decentralized structure favored by Republicans. Chopra, who has been a member of the Consumer Federation of America, will likely focus on many of that association’s priorities, said Eric Grover, director of Intrepid Ventures.

“Payday loans and subprime consumer loans are always high on activists’ wish lists,” Grover said, adding that there may also be more scrutiny of cryptocurrency-related projects. like Diem, the Facebook-affiliated stablecoin project formerly known as Libra. Libra has long been subject to regulatory heat from liberals and conservatives around the world.

Crypto under scrutiny

Acting as commissioner of the FTC, in 2019 Chopra joined UK Information Commissioner Elizabeth Denham, the European Data Protection Supervisor and other international regulators in calling for Libra to be scrutinized. Gensler’s appointment as head of the SEC could be bad news for Ripple, as people in the past has said initial coin offerings should be regulated as securities, a position that puts the SEC at odds with Ripple’s stance that XRP is a utility. people also worked on cryptocurrency technology at MIT and is a proponent of strong cryptocurrency regulation.

“In the past, the CFPB has warned of the risks of cryptocurrencies,” Grover said. “If they become more mainstream, if Diem launches, expect the CFPB to do more.”

A push to cut payday loans could open up opportunities for fintechs that offer payroll flexibility without creating the compounding flow of payday loans. Blockchain and AI have emerged in recent years, using faster payment processing and alternative underwriting to issue short-term credit at lower cost.

Chopra’s other top priorities will likely include restoring the Fair Lending Unit and increased enforcement. A regulatory proposal notice will also likely come for open banking, which signals more rules for data aggregators such as Plaid. Visa recently canceled its offer of acquire Posterpartly because of regulatory scrutiny, according to Benjamin Saul, a Washington banking partner at firm Bryan Cave Leighton Paisner.

“The focus will continue to be on consumer ownership of data as well as third-party access to banking information when approved by consumers,” Saul said, adding that the CFPB will likely continue its programs. aimed at encouraging fintech payments and innovation, such as the trial disclosure sandbox. . “However, the success of fintechs pursuing these avenues will depend much more on the bureau’s assessment of the net benefit to consumers of a given product or service.”

Red state caps interest rates on payday loans: “It transcends political ideology”


Nebraska voters have overwhelmingly chosen to limit the interest rates that payday lenders can charge, making it the 17th state to limit interest rates on risky loans. But consumer advocates have warned that future payday loan protections may need to be put in place at the federal level due to recent regulatory changes.

With 98% of districts reporting, 83% of Nebraska voters approved Initiative 428, which will cap annual interest charged for deferred filing services, or payday loans, at 36%. On average, payday lenders charge 400% interest on small loans nationwide, according to the Center for Responsible Lending, a consumer advocacy group that supports broad industry regulation.

By approving the ballot measure, Nebraska became the 17th state in the country (plus the District of Columbia) to put in place a cap on payday loans. The overwhelming vote in a state where four of its five electoral votes will go to President Donald Trump – the state divides its electoral votes by Congressional constituency, with Nebraska’s second district voting for former Vice President Joe Biden – shows that the issue could garner bipartisan support.

“It is not a very regulated, leftist state,” said Noel Andrés Poyo, executive director of the National Association for Latino Community Asset Builders, a Latin American business advocacy group.

“The people of Nebraska are on average not very enthusiastic about limiting the financial services industry,” Poyo added. “But when you ask evangelical Christians about payday loans, they object to it.”

Read more: For Desperate Americans Considering A Payday Loan, Here Are Other Options

Industry officials have argued that the ballot measure will hamper consumers’ access to credit and said the rate cap means lenders will not be able to operate in the state.

“It is like eliminating regulated small dollar credit in the state while doing nothing to meet the very real financial needs of Nebraskans, including in the midst of the COVID-19 pandemic and economic downturn,” Ed said. D’Alessio, Executive Director of INFiN, a national trade association in the consumer financial services industry.

The success of the ballot measurement in Nebraska could presage similar efforts in other states. Other states that have capped payday lender interest in recent years through voting measures like Nebraska include Colorado and South Dakota.

“It transcends political ideology,” said Ashley Harrington, federal director of advocacy at the Center for Responsible Lending. “There is just something wrong with triple-digit interest rates and trapping people in debt cycles.”

Experiences in these states add further support to initiatives to cap interest on small loans. In South Dakota, the volume of alternative unsecured and payday loans offered by credit unions, which are subject to an 18% and 28% rate cap, has grown significantly since the ballot measure was passed. in 2016, studies have shown. And polls show continued support for the interest rate cap on payday loans among a large majority of South Dakotas.

Federal regulators have eased limits on payday lending industry

Despite the success of the measure in Nebraska, changes at the federal level could weaken efforts to regulate the payday lending industry and cap the interest rates it charges.

In July, the Consumer Financial Protection Bureau released a new rule repealing provisions of a 2017 rule that required payday lenders to determine whether a person will be able to repay their loans. Critics in the payday industry have long argued that high loan interest rates cause people to spiral into debt, whereby they have to borrow new loans to pay off existing payday loans.

NALCAB, which is represented by the Center for Responsible Lending and Public Citizen, filed a lawsuit in federal court last week against the CFPB seeking to overturn the new rule.

Meanwhile, the Office of the Comptroller of the Currency, which regulates national banks, finalized the “real lender” rule last month. This new regulation allows non-bank lenders, such as payday lenders, to partner with banks to provide small loan amounts. Since the loans would be made through the bank, they would not be subject to government-imposed interest rate caps. Critics have called the new regulation a “rent-a-bank” system and say it could harm consumers.

“It’s not a loophole, it’s a gaping tunnel,” said Poyo, criticizing the new OCC regulations.

If Democrat Joe Biden wins the presidential election, his administration would take over the leadership of the CFPB and OCC and could reverse these new policies, Poyo said.

However, Harrington argued that the federal government should go further and create a federal cap on interest rates. Even though control of Congress remains divided between Democrats and Republicans, Harrington said lawmakers should learn from the success of the voting measures in Nebraska and South Dakota.

“Everyone should be able to get safe, affordable consumer loans that don’t have triple-digit interest rates,” Harrington said.

Payday Loans: Find Better Alternatives


When you’re faced with an emergency — car repairs, medical bills, or other unexpected expenses — it can seem like your only choice is a payday loan. It’s not. You have other options that are much less expensive and risky than payday loans.

We’ve scoured the country and found local and regional resources that can help with emergency expenses, whether through assistance programs or small loans. Choose your state below and find options near you.

About these resources

What are these organizations — and why should I trust them?

NerdWallet has reviewed these organizations to ensure that they provide consumer-focused services, either through low-interest loans or financial assistance.

These local community centers and non-profit organizations serve people who need help with rent, transportation, utility payments, or other emergencies. They are part of your community and have already helped people like you. Many offer advice and training to help you make sound financial decisions even after the immediate crisis is over.

Not only do these organizations provide an alternative to payday loans, but they also help avoid a cycle of debt that can trap you for years. This allows you to make the right financial decisions for you and your family far into the future.

Why is NerdWallet interested in payday loans?

NerdWallet’s mission is to provide consumers with clarity for all of life’s financial decisions – from immediate worries about paying for necessities to long-term decisions that lead you toward a life free of financial stress.

Toxic loans made by payday lenders complicates this path. Every year, payday loans trap millions of consumers in a cycle of debt.

Our goal is to support organizations that provide better alternatives and promote financial literacy.

Learn more about payday loans and alternatives

Know where every dollar goes

Find ways to spend more on the things you like and less on the things you don’t.

Are Payday Loans Good? | Silver


The idea of ​​accessing your paycheck before it actually reaches your bank account is appealing, especially in this economy. Unfortunately, there may be a catch.

Payday loans – which are small, unsecured loans that don’t require collateral and have a short duration – are a popular way for people to access cash quickly. But in practice, they end up costing borrowers a lot of money, so you need to know what you’re getting into.

Todd Christensen, education manager at the nonprofit debt relief agency Money Fit by DRS, explains that payday loans are built around the concept of providing you with just enough money to get to your next payday, which is theoretically within two weeks or so.

As such, the loans are very convenient – businesses generally “organize their offices more like a fast food restaurant than a lender,” with menu-like posters defining fees and requirements.

And just like at McDonald’s, deadlines are tight.

“The loans are quick, which means you can get the money into your account in an hour or less,” says Christensen. “Compare that to banks and credit unions that will take days, if not weeks, to approve your personal loan, especially if you have no credit or bad credit. “

The problem with payday loans is that they actually come at a high cost. Some lenders advertise their fees as a percentage rate, but since these rates are based on the (short) term of the loan, they tend to be much worse than they appear. For example, says Christensen, “a 15% two-week fee equals 390% APR (15% x 26 two-week quarters per year).”

This is not good, especially considering that the borrowers who apply for these loans run the risk of not being able to afford the repayment.

“Loans are incredibly expensive and cause a whole host of financial consequences and harms,” ​​said Lisa Stifler, director of state policy at the Center for Responsible Lending. “If you’re already struggling to pay your bills on a monthly basis, and that loan adds up to it in full in a short period of time… it ends up pushing people into more debt.

Basically, it’s a trap. Research shows that about 80% of payday loans are rolled over or renewed within two weeks. Active borrowers tend to go out nine or more loans per year.

Here’s an example of how things can get out of hand so quickly. Suppose you take out a $ 200 payday loan with a $ 30 fee. But when the two week period comes to an end, you can’t pay it back. So you turn it over. Now you have to pay the $ 200 you borrowed, the first $ 30, and an additional $ 30 fee. You only need a few months to owe more in interest / charges that you never had on credit.

Worse yet, regulation is patchy at best. In fact, the Consumer Financial Protection Bureau last month canceled a 2017 rule requiring lenders to verify borrowers’ income and expenses before granting them a loan. Stifler says the decision to revoke this “common sense principle” means “lenders will be able to continue to operate as usual.”

Lenders and online applications are also coming under scrutiny: in August 2019, officials in 11 states and Puerto Rico announcement a survey of the payday advance industry. They are investigating whether tip mechanisms, monthly subscriptions and other fees “are usurious and harm consumers.”

Bottom Line: Payday loans can enter predatory territory if you’re not careful. Look out for warning phrases like “get cash fast”, “same day transfer” and “no credit check” in ads, and be smart when borrowing money.

Ideally, you would never run out of cash just because you have an emergency fund. But if you find yourself in this situation, Christensen recommends:

  • ask a friend for a small short-term loan and offer to pay interest
  • get a cash advance with my credit card
  • consider a personal loan through an online peer-to-peer platform, bank or credit union

Everyone finds themselves in a difficult situation sometimes, but the goal is to find an option with a lower APR (and fewer terms) than a payday loan.

“Going to a payday loan in such cases is a short-term solution that usually ends up making matters worse,” he says.

Ads by money. We may be compensated if you click on this ad.A d

You never know when you might find yourself strapped for cash – the good news is, you have options.

A personal loan can help you mitigate losses and get you back on track. Click here to explore your options!

Apply today

More money :

Do not co-sign your child’s private student loan without first answering these 3 questions

The best books to help you pay off your debt, according to financial experts

Coronavirus outbreak highlights importance of emergency funds

The best credit card deals of 2020

CFPB removes some consumer protections for payday loans : NPR


A manager at a financial services store in Ballwin, Mo., counts money paid to a customer for a loan in 2018. Consumer groups blasted a new payday loan rule and its timing during a pandemic that has put tens of millions of people out of work.

Sid Hastings/AP

hide caption

toggle caption

Sid Hastings/AP

A manager at a financial services store in Ballwin, Mo., counts money paid to a customer for a loan in 2018. Consumer groups blasted a new payday loan rule and its timing during a pandemic that has put tens of millions of people out of work.

Sid Hastings/AP

Federal regulators have finalized a new rule for payday lenders that removes a key provision crafted under the Obama administration. Under the revised rule, lenders will no longer have to verify that borrowers can repay their loan when due.

Consumer advocates say that without this protection, borrowers are often forced to borrow again and again, at interest rates as high as 400%.

The Consumer Financial Protection Bureau — a watchdog agency created in the wake of the 2008-09 financial crisis — tried to rein in the practices of payday lenders, drafting a rule that was finalized in 2017. The Trump administration s has been trying to water down Reign since he took over the Consumer Affairs Office at the end of the year.

The payday loan industry welcomed the review.

“CFPB’s action will ensure that essential credit continues to flow to communities and consumers across the country, which is especially important during these unprecedented times,” said D. Lynn DeVault, President of Community Financial Services Association of America, an industry trade group. .

Consumer groups have blasted the content of the new rule and its timing during a pandemic that has put tens of millions out of work.

“There’s never a good time to allow predatory lending carrying 400% interest rates, but now is the worst possible time,” said Mike Calhoun, president of the Center for Responsible Lending. “The pain caused by the CFPB gutting the payday rule will be felt most by those who can least afford it, including communities of color who are disproportionately targeted by payday lenders.”

The revised rule leaves in place another Obama-era provision designed to limit the ability of payday lenders to make repeated collection attempts on borrowers’ bank accounts. This measure – which is currently suspended under a court order – can help avoid costly overdraft fees.

Office of Consumer Affairs removes restrictions on payday loans


The Consumer Financial Protection Bureau on Tuesday officially rolled back a plan to place new limits on payday lending, giving the industry a major victory by killing tougher rules it has spent years lobbying to overturn.

The proposed rules would have been the first major federal regulations on an industry that grants $ 30 billion a year in high-interest short-term loans, often to borrowers already in difficulty. These loans can leave borrowers trapped in debt cycles, incurring fees every few weeks to replenish loans they cannot afford to repay.

The change would have limited the number of loans borrowers could take out in a row and would have required lenders to verify that they had the means to repay their debt. The rules have saved consumers – and lenders – according to estimates by the Office of Consumer Affairs some $ 7 billion per year in fresh.

Lenders have fought fiercely against the rules, which were one of the bureau’s signature efforts during the Obama administration, arguing the changes would hurt consumers by denying them access to emergency credit.

This argument resonated with the agency as it took a more business-friendly approach under President Trump.

Mick Mulvaney, then Mr Trump’s budget chief, became the agency’s acting director in 2017 and delayed the entry into force of the new restrictions. Kathleen Kraninger, the current director of the office, has started the formal process of dismissing them two months after taking office.

The people appointed by Trump were so determined to eliminate the rule that they manipulated the agency’s research process to steer it toward their predetermined outcome, an office worker said in an internal memo reviewed by The New York Times . The disclosure of the memo prompted Congressional Democrats to ask federal oversight bodies to investigate.

Ms Kraninger defended the decision on Tuesday, saying the proposed restrictions were based on insufficient evidence to justify the harm they would have caused to lenders.

Although she left minor provisions in place, including one preventing lenders from repeatedly attempting to withdraw funds from a borrower’s overdrawn bank account, Ms Kraninger said removing the rest of the rule ” would ensure that consumers have access to credit in a competitive market ”.

The Community Financial Services Association of America, an industry trade group that has lobbied strongly against the planned restrictions, said Ms. Kraninger’s decision “would benefit millions of American consumers.”

Critics, including more than a dozen consumer groups, said the agency prioritized financial firms over the people it was supposed to protect.

“In the midst of an economic and public health crisis, the director of CFPB chose to devote a lot of time and energy to undoing protection that would have saved borrowers billions in fees,” said Linda Jun. , Senior Policy Advisor for Americans for Financial. Reform, a consumer advocacy group.

The Pew Charitable Trusts, which have long called for restrictions on high-interest loans, called the move a “big mistake” that exposes millions of Americans to unaffordable payments with triple-digit interest rates.

Sen. Sherrod Brown of Ohio, the leading Democrat on the banking committee, said removing the rule rewards intense industry lobbying efforts to push back the regulations.

Payday lenders have paid $ 16 million to congressional candidates, mostly Republicans, since 2010, according to the Center for a Responsive Policy. The Community Financial Services Association of America held its 2018 and 2019 annual conferences at the Trump National Doral Golf Club.

The office “gave payday lenders exactly what they paid for by ousting a rule that would have protected American families from predatory loans,” Brown said.

The deleted rules could be reinstated, in one form or another, if former Vice President Joseph R. Biden Jr. wins the presidency in November. A Supreme Court ruling last week gave the president the power to fire the office manager at will.

What you need to know about payday loans and auto title loans


If the coronavirus pandemic is causing you financial stress, you are not alone. Millions of Americans have lost all or part of their income because they cannot work. Government Economic Impact Payments can help, but some people may look for other ways to borrow money for a short period of time. They may consider options like a payday loan or a car title loan, which can be quite expensive. Here’s what you need to know.

Payday loans

A payday loan is a loan made for a short term. Sometimes only two weeks. To get a payday loan, you give the lender a personal check for the amount you want to borrow, plus any fees the lender charges you. The lender gives you cash less fees. On your next payday, you must pay the lender the amount you borrowed plus fees, in cash.

Payday loans can be very expensive. Here is an example :

  • You want to borrow $ 500. The fee is $ 75. You give the lender a check for $ 575.
  • The lender gives you $ 500 in cash. He keeps your check.
  • When it’s time to pay the lender back, often within two weeks, you pay them $ 575. The lender returns your check to you.
  • The bottom line: You paid $ 75 to borrow $ 500 for two weeks.

Car title loans

An auto title loan is also a loan made for a short period. They often only last 30 days. To get a car title loan, you give the lender title to your vehicle. The lender gives you the money and retains title to your vehicle. When repaying the loan, you must pay the lender the amount you borrowed plus fees. Car title loans can be very expensive. Here is an example :

  • You want to borrow $ 1,000 for 30 days.
  • The fees are 25%. To borrow $ 1,000, it’s $ 250.
  • When it’s time to pay off the lender in 30 days, you pay them $ 1,250.

Car title loans are also risky. If you can’t pay back the money you owe, the lender could take your vehicle away from you. He could sell it and keep the money, leaving you without transport. This video shows what can happen.

Other ways to borrow money

Payday loans and auto title loans can be very expensive. Consider other ways to borrow money, such as get a loan from a bank or a credit union.

Most loans have an annual percentage rate, or APR. The APR is how much it costs you to borrow money for a year. When you get a payday loan or cash advance, the lender should tell you the APR and the cost of the loan in dollars.

Here is a comparison of loan fee of $ 500 for one year.

What if I’m in the military?

If you are in the military, the law protects you and your dependents. The law limits the APR on many types of credit, including payday loans, auto title loans, personal loans, and credit cards, to 36%. The law also requires lenders to give you information about your rights and the cost of the loan. the the military also offers financial aid and help you manage your money.

Other options if you can’t pay your bills

  • Ask for time. Ask the companies that you owe money to if you can have more time to repay the money.
  • Acquire help. A credit counseling you may be able to help you manage your debt.
  • Apply for unemployment. Consider applying for unemployment insurance benefits from your state. Learn more and find out if you qualify on the Ministry of Labor website.

Get more tips on managing the financial impact of the coronavirus, including what you can do if you:

Auto finance and payday loan repayments may be frozen for up to three months due to coronavirus – The Sun


Distressed payday loan and auto finance borrowers have been offered up to three months of payment vacation if their finances have been affected due to the coronavirus.

The Financial Conduct Authority (FCA) today confirmed a series of proposals first announced this month, including freezing payments and interest, to ensure borrowers are treated fairly.

⚠️ Read our coronavirus live blog for the latest news and updates

    Payday loan and auto finance borrowers got a helping hand with repayments
Payday loan and auto finance borrowers got a helping hand with repaymentsCredit: Getty – Contributor

The following is confirmed:

  • Payday loan clients should be offered a month’s interest and a payment freeze
  • Borrowers with other high-cost types of credit, such as buy it now, pay later, pawn shops, and lease-to-buy agreements, should be offered payment breaks of up to up to three months.
  • Auto finance borrowers should be offered repayment holidays of up to three months

The measures will enter into force from April 27, 2020.

Businesses are not required to follow the measures, but the FCA says it expects it and adds that it can take enforcement action if they don’t treat customers fairly.

Now give the Sun’s NHS appeal

Britain’s four million NHS workers are on the front lines in the battle against the coronavirus.

But while they help save lives, who is there to help them?

The Sun has launched an appeal to raise £ 1MILLION for NHS workers.

The Who Cares Wins appeal aims to provide life-saving support to staff when they need it.

We have partnered with NHS Charities Together in their urgent Covid-19 appeal to ensure the money gets to exactly who needs it.

The Sun is donating £ 50,000 and we would love YOU to help us raise a million pounds, to help THEM.

No matter how little you can save, please donate today here


He also points out that lenders can go above and beyond, including offering longer payment freezes where appropriate.

Customers who complain about non-compliance with the rules by lenders will still have the right to complain first to the company concerned and then to the Financial Ombudsman Service as usual.

Christopher Woolard, Acting CEO of FCA, said: “We have been working quickly to introduce temporary financial relief tailored to a range of specific credit products.

“Many companies are already working with their customers, but these measures ensure that all consumers affected by the coronavirus emergency can request a temporary freeze on their payments. “

Here is what the regulator proposed in more detail.

One month payment and interest freeze for payday loans

For high-cost, short-term loans, such as payday loans, the FCA says companies should provide a one-month payment and interest freeze to customers facing payment difficulties due to the pandemic. coronavirus.

He says offering a freeze of just one month both reflects the shorter duration of most loans and prevents businesses from accumulating additional interest during the freeze.

After the freeze, companies should make it possible for borrowers to repay their loans affordably.


Stay tuned for the latest news and numbers – and essential advice for you and your family.

To receive The Sun’s Coronavirus newsletter in your inbox every tea time, register here.
To follow us on Facebook, just ‘Like’ our Coronavirus page.
Receive Britain’s best-selling newspaper every day on your smartphone or tablet – find out more.

The FCA says it could be a single payment at the end of the term or a number of smaller payments.

He adds that companies should also consider whether other options are more suitable and use existing measures called “forbearance” on a case-by-case basis if the customer is expected to be in financial difficulty for more than a month.

Forbearance measures include the suspension, reduction, waiver or cancellation of interest or additional charges, postponement of payment of arrears, or acceptance of token payments for a reasonable period of time.

But James Jones, a consumer expert at credit reference agency Experian, warns, “You must confirm an agreement with your lender before stopping any payment, such as canceling direct debits.

“Unless you have an agreement in place, unauthorized missed payments can result in penalties and are likely to affect your chances of getting credit in the future.”

Three-month payment freeze for lease with option to buy, buy it now, on-payment, and pawnshop agreements

For borrowers with rent to own, buy now, pay later, or a pawn shop, companies must offer a three-month payment freeze to troubled customers.

With rent to own, where borrowers pay monthly fees for household items such as televisions and refrigerators, the FCA says businesses should not repossess property used during the payment freeze.

When it comes to buying now and paying later, the FCA says customers during a promotional period, such as the first three months without interest, should be granted a three-month extension.

In addition, pawn shops should extend the repayment period for the three-month freeze period or, if the repayment period has already ended, agree not to serve notice of sale of an item that has been put. pledged for this period.

Pawn shops are also expected to suspend planned sales of consumer items during any payment freeze.

During repayment periods, borrowers are generally entitled to recover their property from pawn shops if they repay the loans in full, plus interest.

FCA adds that while social distancing means that pawn shops and rental companies per se are unable to redeem, collect or repossess property, they shouldn’t pass on any additional fees or charges. on borrowers.

But he points out that businesses will be able to continue charging interest while payments are frozen for these three types of loans – unless a customer needs additional assistance.

In this scenario, lenders can use existing measures on a case-by-case basis, including the ability for the company to suspend, reduce, waive or waive any other interest or charges, defer payment of arrears, or accept nominal payments for a reasonable period of time.

If a customer is unable to resume making payments at the end of a deferred payment period, they should contact their lender.

The FCA says companies should work with customers to resolve these difficulties before payments are missed.

Three-month payment freeze for auto finance borrowers

Here, the FCA expects companies to offer a three-month payment freeze to customers who have temporary difficulty meeting finance or lease payments due to coronavirus.

He adds that companies shouldn’t end agreements or repossess vehicles if borrowers are having trouble and still need to use their cars.

The FCA adds that companies should not change customer contracts unfairly.

For example, they should not try to use the temporary drops in car prices caused by the coronavirus situation to recalculate the personal contract purchase lump sum (PCP) payments at the end of the term.

Lump sum payments are an additional amount that auto finance borrowers can pay at the end of their contract if they wish to purchase the car from the dealership.

Additionally, when a customer wants to keep their vehicle at the end of their PCP contract but doesn’t have the cash to cover the lump sum payment, the FCA says companies should work with customers to find a solution.

He adds that refinancing the lump sum payment might “not be appropriate” in the circumstances.

James Fairclough, CEO of AA Cars, points out that distressed borrowers need to get in touch.

He said: “It is important to note that lenders will not automatically make special arrangements.

Drivers are responsible for contacting their lender before they encounter any difficulties.

“Call centers are understandably busy these days, but there are many providers who offer payment holiday request forms online. “

Is there any other help available?

The move follows measures announced by the regulator earlier this month for lenders to offer temporary payment freezes on personal loans and credit cards for up to three months.

Banks have also been encouraged to cede up to £ 500 in interest-free overdrafts and ensure borrowers are not stung by high overdraft interest rates.

The government has also asked mortgage lenders to offer three-month payment holidays.

But the regulator had been criticized for leaving out high-cost credit and auto finance borrowers, who until now had to negotiate the aid themselves on a case-by-case basis.

Chancellor Rishi Sunak announces mortgage lenders to offer three-month break on bills to customers affected by coronavirus

Payday loans: Dickensian system sends borrowers to jail, group says


Payday loans provide a way for workers to get money quickly. What might surprise many borrowers: falling behind in repaying these loans can land them in court – and even behind bars.

The problem stems from a clause in payday loan contracts, as well as oddities in the US legal system. Over 99% of in-store payday lenders have what is called a small claims “exclusion” in their contracts, which means that instead of going to arbitration for unpaid debt, they can the case in small claims court.

If the borrower does not appear in court, he can be arrested for contempt of court. And that’s exactly what’s happening, with payday lenders increasingly relying on this strategy, according to a new to study of the Consumers Federation of America (CFA).

In Utah, which has lender-friendly laws, about two-thirds of small claims cases were related to payday lenders and other high-rate lenders, the CFA analysis found.

“This study provides a troubling example of a ‘pipeline from debt to prison’,” CFA chief financial officer Christopher Peterson said in a statement. “Some payday lenders use criminal justice system to collect rates three-digit interest rate of insolvent consumers. “

The typical amount of payday debt that brings a borrower to court, according to the study: $ 994. And given the exorbitant interest rates on payday loans and auto title loans, which are secured by a borrower’s vehicle, it’s no surprise borrowers are falling behind. The rates for these loans are on average nearly 400%, which works out to about $ 15 for every $ 100 borrowed; some lenders charge more than 1000%.

The “pipeline from debt to prison”

In Utah, the system appears to benefit payday lenders because the bond posted by borrowers is then returned to financial companies, the report notes. And contrary to the goal of a small claims court providing a quick legal decision, some cases can go on for years, the consumer group found.

The system is reminiscent of “Dickensian” debtor prisons, the CFA said in its report.

“Advocates have described this phenomenon as a ‘pipeline from debt to prison’ which can lead to long-term psychological trauma, loss of income and other damaging effects on debtors and their families,” he said. he noted.

The group also said similar practices could occur in small claims courts in other states.

People sentenced to prison for unpaid medical debt


Prisons for debtors have been abolished in the United States in the 1830s. More recently, in the twentieth century, the Supreme Court ruled in three cases, that it is unconstitutional to imprison people too poor to repay their debt. But the rulings have left it up to local courts to determine whether a person is truly destitute or simply chooses not to make a payment.

Although it is illegal to jail someone for an unpaid debt, people who fall behind in paying off a debt find themselves under arrest or locked up due to issues such as failure to pay. go to a hearing. But a court appointment can be difficult for many low-income borrowers, who may have rigid work schedules or lack transportation.

This is what happened to Cecila Avila, a Walmart employee, according to a ProPublica Report in December. Avila, who said she couldn’t take time off work to go to court for her payday loan payments, was arrested at her store and handcuffed in front of shoppers and colleagues.

“It didn’t make sense to me,” she told ProPublica. “Why am I arrested for this?” “

Order for medical expenses

In rural Kansas, some consumers also have face jail time for medical debt, as CBS News reported earlier this month. In this situation, the court orders people with unpaid medical bills to appear in court every three months and declare that they are too poor to pay in what is called a “debtors review.” But if two hearings are missed, the judge issues an arrest warrant for contempt of court. The deposit is set at $ 500.

The United States Civil Liberties Union has also found that people can be arrested for tickets, auto loans, and even credit card debt. The problem is compounded by the fact that, unlike in criminal cases, defendants involved in civil cases on issues such as unpaid debts do not have the right to legal representation.

Digital Payday Loans Now Available In One App


Payday loans, those short-term loans that have caused trouble for cash-strapped workers for decades, have finally gone digital.

According to a report of Atlantic, a number of new apps offer employees cash in exchange for deductions from their future paychecks.

So how do they work?

A new app, called Earnin, doesn’t offer loans, it offers “cash advances”. The Earnin app doesn’t charge its customers a fee to find them money, it asks for “tips” – which are not mandatory but recommended. For example, a customer might request an advance of $ 100 and then leave a tip of $ 9.

Over time, Earnin increases its borrowing limit, forcing customers to continue borrowing larger sums of money to continue using the service.

To avoid getting robbed, Earnin requires customers to give the company full access to their bank accounts, which allows the company to reduce loan allowances if it is concerned about people’s ability to pay. refund (this also gives Earnin valuable consumer data).

But these companies operate in a gray area

Unlike payday lenders, who are infamous for harassing their clients into paying off their debts, Earnin and other cash advance apps – including Dave and MoneyLion – don’t require their clients to give them a tip.

But, on the other hand, payday lenders are tightly regulated and cash advance services like Earnin are not.

So, while states like New York cap interest rates at 25%, Earnin’s clients are often forced to pay interest rates of up to 400%, even though they are not technically required (9 $ on $ 100 over 2 weeks is 400% +).

Payday loans are available through the app


Jonathan Raines needed the money. An app promised to help.

He searched online for an alternative to traditional payday lenders and came across Earnin, who offered him $ 100 on the spot, to be deducted from his bank account on payday.

“There are no payments and no really high interest,” he told me, comparing the app favorably to a payday lender. “It’s better, in that sense.

Earnin did not charge Raines a fee, but asked him to “tip” a few dollars on each loan, with no penalty if he chose not to. It sounds simple. But nine months later, what was originally a stopgap became a crutch.

“You borrow $ 100, tip $ 9 and start over,” Raines, a highway maintenance worker in Missouri, told me. “Well, then you do that for a while and they raise the limit, which you probably borrow, and now you’re in a cycle of paying and borrowing, paying and borrowing.” Raines said he is now borrowing around $ 400 per pay cycle.

“I know it’s about accountability, but once you’re in that cycle you’re stuck,” Raines told me. Borrowing from his own salary did not make it easier to use his money. Mainly because the app changes its terms based on users ‘cash flow: Earnin requires constant access to users’ bank account balances, and when its algorithms detect that a user might not be able to repay, the application lowers borrowing limit. (A representative of Earnin said the company notifies borrowers two days before their next check what the next borrowing maximum is and sets those limits so users can’t borrow more than they have. earned during a pay period.)

Two days before a recent paycheck, Raines told me, the app informed him that his maximum loan amount would be $ 100 less than he used to. no access, ”Raines said. “They make you addicted and you keep coming back for more.”

Earnin doesn’t call his department a loan. Rather, it is an “advance”: users borrow from their own paychecks, not the app. It doesn’t require a credit check and doesn’t promise any hidden fees or additional fundraising fees, even if users don’t tip or refund. His terms of service indicate that he will never attempt to collect an advance that has not been repaid.

Earnin is one of a new class of online loan applications marketed as frictionless alternatives to traditional payday lenders. They are advertised on dating apps, YouTube and between episodes of a Hulu Frenzy. (Rapper Nas is an investor in Earnin, and spiritualist TD Jakes filmed praising the service in June.)

Importantly, rather than charging interest or financing fees, these apps collect their money through these “tips”, as businesses do. Dave and Silver lion. Unlike, say, a food delivery app, tips aren’t used to increase the hourly rate of a low-wage worker, but just the businesses themselves: Dave said advice are “what keeps our lights on”, and Moneylion says it’s tips “help us cover the high costs of no interest on Instacash”. Earlier this year, after an investigation by New York state regulators, Earnin ended his practice increase users’ borrowing limit based on the tip they have given. It’s still tell users “If the Earnin community keeps [tipping], we will be able to expand our services.

There is an analogue for the services offered by these apps: payday loans, which more than a dozen states have effectively prohibited. Payday lenders peddle small loans that are immediately available and then debit the borrowed amount plus finance charges the next time the borrower pays. Finance costs and interest rates associated with payday loans are extremely high, up to $ 30 for every $ 100 borrowed, according to the Consumer Finance Protection Bureau.

MoneyLion, Dave and Earnin reject the comparison. “Compared to payday loans and other very expensive options, our members find Instacash to be a much better alternative,” MoneyLion CEO Dee Coubey told me in a statement. Noting that it does not charge late fees, require no tips, and do not report non-payment to the credit bureaus.

“We truly see ourselves as advocates for our members and the products we build are meant to serve them and help them improve their financial well-being,” said RJ Bardsley, vice president of corporate communications at Earnin , in a press release sent by email. “The truth is, we live in a world where people are charged $ 35 for an overdraft or outrageous fees and interest rates for payday loans, and unexpected medical bills continue to put people in debt. Our members pay what they think is fair, even if it’s zero.

But experts say these apps offer a whole new set of tips and terms, refined to make it appear secure and modern. “They are not the same [as payday lenders], but they share the same DNA, ”Alex Horowitz, research manager at Pew’s Consumer Finance Project, told me. “These are small sums of money for people who live paycheck to paycheck [and] do not have a buffer to account for volatility in income or expenditure. “

In fact, some of the new, user-friendly adjustments to the formula may help separate Earnin, legally speaking, from being considered a lender. Although payday lenders are notorious for go to the extreme to collect borrowers, garnishing their wages and selling their debt to collection agencies, Earnin waives his right to sue those who do not repay, which also means that he is not regulated like a typical payday lender: In States where payday loans are permitted, lenders are still required to disclose the APR and limit loan amounts to a certain percentage of the user’s income. To win is not. (If so, potential borrowers might be alarmed: $ 9 on a two-week $ 100 loan is over 400%; states like New York and Nevada cap interest rates on loans at 25%.)

“It’s not very clear to a consumer going online what they’re getting themselves into,” Graciela Aponte-Diaz, director of federal campaigns at the Center for Responsible Lending, told me. “It’s not even very clear to us as professionals and experts in this field. You can’t compare apples to apples what those costs are, for a $ 5 tip on a hundred dollars or a $ 15 a month fee.

The new payday lenders are pretty much the same as the old payday lenders, except the high-tech shine also means that in addition to money, users provide an immense amount of data. In addition to monitoring users’ bank accounts and spending habits, Earnin asks users to share their timesheets, which Earnin uses to record how many hours per week they worked. Raines told me he had the app enabled to track his location through his phone, so she could verify that it was working consistently.

A recent Los Angeles Times item notes how more and more banks are leveraging transaction data to help retailers attract customers. Earnin, like Dave and Moneylion, is working with start-up Empyr to do something similar: the apps get publisher fees when their users use the in-app offers provided through Empyr. An Earnin user who has opted for the rewards program and frequently frequents a restaurant may, for example, be offered a coupon at a local pizzeria, specifically targeted based on transaction data shared with Earnin. Earnin receives a fee when users use offers, and Empyr uses this data to track the effectiveness of its advertising partnerships with merchants.

The wealth of transaction data, including loan data, is transforming the broader credit market; banks and lenders ingest always more information users as they attempt to determine creditworthiness, and not just traditional inputs like mortgage payments and business loans, but also small loan repayment history and even social media data.

For example, Experian, the leading consumer credit reporting agency, offers a service called Clarity, which allows loan applicants to submit alternative data, including small loan history, if they fail checks. initial credit. The company has confirmed that it accepts repayment data from loan applications. This only further encourages data collection. In the hope of getting enough cash to stabilize without relying on quick and swift credit, users are encouraged to hand over more cash and more data.

Apps are definitely not the reason someone needs money. Housing costs block all but the most educated from well-paying jobs in coastal towns. About a fifth of Americans can’t afford an unexpected expense of $ 400. Consumer advocates I spoke with were clear-sighted about the larger issue, but admitted that people who need help have only a small handful of options, including seeking advice in credit, defer utility payments, and reach out to non-profit organizations that offer zero-interest loans.

Raines knows this all too well. Recently, when Earnin lowered his max again, he took it in stride. “It’s rather good, [because] I’m trying to get out of it completely. But it’s hard when you need the money and you don’t have it.

Congress should cap interest on payday loans


Patrick Rosenstiel’s recent essay on Community Voices said interest rate cap policies would create a less diverse and less inclusive economy. He says, “Consumers who turn to small lenders for high-interest loans are making informed choices for their personal financial well-being.” I couldn’t disagree more, based on my years of working with Minnesotans trapped in predatory and usurious payday loans. As the director of Exodus Lending, a nonprofit that refinances payday loans and predatory installment loans for Minnesotans caught in what’s called the payday loan debt trap, my point of view is, by experience, quite different from that of Rosenstiel.

In some cases consumer choices are well informed, although in many cases people are desperate and unaware that they are likely to be trapped in a cycle of recurring debt and subsequent loans, which is the intention of the lender. The average Minnesota payday borrower takes out seven loans before they can repay the amount originally borrowed.

The article continues after the ad

Small loans, huge interest

Since 2015, at Exodus Lending, we have worked with 360 people who, when they came to us, were paying an average of 307% annual interest on their “little dollars” loans. This means that the loan may not have been large, but the amount these borrowers were paying their lenders, such as Payday America, Ace Cash Express or Unloan, certainly was. Because of what we have seen and what our program participants have experienced, we strongly support a 36% interest rate cap on these loans.

Sara Nelson-Pallmeyer

There are times when almost any of us can use a little extra cash – maybe the car battery is running out; a child’s growth spurt means they need a new pair of shoes; an unexpected illness or death in the family means unwelcome expenses; etc For many of us, there is a safety net of friends, family, or a savings account that can help us weather the storm, while still being able to pay our regular expenses. For others, it is a test. The answer, however, should not be a loan sharking at rates of 70%, 100% or more than 400% APR! Alternatives must be available for people to access. Even though companies may be able to make ridiculous amounts of money by taking advantage of people in their vulnerable financial situation, that doesn’t mean it’s a good idea.

Just ask the community members themselves! According to the Center for Responsible Lending, since 2005 no new state has allowed high-cost payday lenders, and some that previously did no longer do so. A few examples: in 2016, in South Dakota – a state not known to be ultra-progressive – 75% of voters supported the initiated Measure 21, which placed a 36% cap on interest rates short-term loans, shutting down the industry. In 2018, Colorado voters passed Proposition 111 with 77% of voters in favor. This also placed a 36% interest rate cap on payday loans. No state that has passed laws to curb this usurious industry has reversed such legislation.

A precedent from 2006: The Military Lending Act

Additionally, it’s useful to know that Congress has already passed legislation that concerns Rosenstiel – in 2006. The Military Loans Act placed a 36% cap on annual interest rates on small consumer loans made active military service members and their families. Why? It was feared that the loans the military got could pose a threat to military readiness and affect military retention! In 2015, the US Department of Defense strengthened these protections.

People living in states with restrictions on small dollar loans won’t suffer. Instead, they won’t be exploited and taken advantage of, and they’ll get by just like they do in places like New York, where such lending has never been allowed.

We advocate placing an interest rate cap on payday loans and other loan sharking while supporting fair and equitable alternatives. Once an interest rate cap is placed on these loans, other products will appear. Lenders will still be able to lend and make a profit, but not at the expense of vulnerable borrowers. I’m glad the US House Financial Services Committee is debating it and I will support the cap!

Sara Nelson-Pallmeyer is the executive director of Exodus Lending.


If you’d like to participate in the discussion, add your voice to the Comment section below – or consider writing a longer Community Voices letter or comment. (For more information on Community Voices, see our submission guidelines.)

Payday loans decline in California as borrowers turn to installment products


Cash-strapped Californians continue to migrate from payday loans to larger installment loans, but they’re not necessarily paying less to borrow.

Last year, Golden State consumers took out 10.2 million payday loans, the lowest number since 2006, according to data released Thursday. The number of payday loans granted in California has declined for five consecutive years.

But part of last year’s decline was offset by an increase in consumer installment loans, many of which are quite expensive. In 2018, lenders issued 1.19 million installment loans ranging from $500 to $9,999, an increase of 12% over the previous year.

The annual increase was 10% for consumer installment loans between $2,500 and $9,999, which generally have no interest rate cap in California. Some 42% of loans made in this category last year carried annual percentage rates of 100% or more, according to state data.

Manuel Alvarez, commissioner of the California Department of Business Oversight, said in a press release that the new data underscores the need to focus on the availability and regulation of low-cost credit products, especially those over 2,500. dollars.

Sacramento state lawmakers are currently considering legislation that would impose a rate cap of 36% plus the federal funds rate on installment loans between $2,500 and $9,999.

The bill has support from consumer groups and some lenders, but has drawn opposition from companies that typically charge higher interest rates. It was approved by the state Assembly in May and passed by a key Senate committee in June.

The shift from payday loans to longer term products may be partly the result of changes in the structure of the small loan industry nationwide.

In recent years, many high-cost consumer lenders have begun offering loans with terms of months, rather than just weeks, in anticipation of the implementation of a Financial Protection Bureau rule. consumers on short-term loans.

This proposal was developed under the Obama administration. Current office management has proposed changes that are favored by the payday industry.

‘Advance pay’ apps aim to disrupt payday loans, two-week cycle

‘Advance pay’ apps aim to disrupt payday loans, two-week cycle

HR managers at G4S, a global security company that employs guards in offices and residential buildings, recently noticed a disturbing trend.

As many as 72% of the company’s American hourly workers quit their jobs every year. The company launched an employee survey to find out why so many people were heading for the exit.

The guards overwhelmingly responded that they were struggling to make ends meet.

“Not only were salaries problematic, but so was the wait for the two-week pay cycle,” said Geoff Gerks, director of human resources.

G4S has therefore joined a growing group of companies, such as Walmart Inc., Taco Bell, The Kroger Company., and Boston Market Corp., which offer their employees the power to access at least some of their paychecks before the traditional two-week period. Gerks says that decision, and a push to raise security workers’ wages under new contracts, was an “easy decision” in a “tough job market that is very, very competitive.”

As the job market tightens, companies, especially in low-wage sectors, are looking for new ways to attract and retain employees. This has created opportunities for Silicon Valley tech startups offering app-based prepayment services to ease some of the pain for workers who live paycheck to paycheck.

“These funds are for work they’ve already done that they can use to deal with unexpected life events,” Wal-Mart spokeswoman Michelle Malashock said. The company has partnered with two prepayment providers, Even and PayActiv. “When our associates are more secure financially, they are better able to do their jobs.”

The rise of prepayment options follows similar moves by gig companies such as Uber and Lyft, which allow drivers to cash in several times a day. It could challenge the traditional payment cycle and help people avoid high-interest loans and credit card bills.

But some worry that prepayment providers are payday lenders in sheep’s clothing. Accelerating compensation cycles could mask a larger problem: wage stagnation.

“Smoothing wage availability over a pay period is beneficial for people who have very little savings,” Chris Tilly, a labor economist at the University of California, Los Angeles, told Bloomberg Law. “What it doesn’t address is why these people have very little savings in the first place. Low pay is low pay, and this is intensified by rising housing, health care and other costs in many places.

Meanwhile, prepayment companies are trying to navigate a legal and regulatory minefield. This includes banking, tax, and employment issues that some states, including California, where many prepayment providers are based, and New York, are just beginning to address. These states could be the first to regulate a burgeoning industry that has yet to catch the attention of Congress and federal agencies.

“Major Life Changer”

Prepayment providers operate under two models. Some, like DailyPay and PayActiv, partner with companies to offer employees payday advances in exchange for monthly or per-transaction fees. The third-party provider faces the money – they don’t transfer money from the user’s employer – and then collects the users’ money either directly from their next paychecks or via a bank account debit payday. Some companies subsidize part of the cost, but in many cases employees must pay transaction or membership fees.

Others, like Earnin, Dave and Brigit, provide services directly to end users. These providers collect advanced funds directly from users’ bank accounts on a specified date.

Some providers have added a revenue stream by partnering with prepaid card services. Dave and PayActiv offer reloadable Visa cards on which users can get advance payment transfers.

Some 350,000 Walmart employees use the Even app to manage their finances or get paid ahead of schedule, according to Malashock. The app has completed more than 5 million transactions totaling $900 million since the Walmart program launched in December 2017.

Prepayment services are similar to setting up an ATM in the lobby of an office, says Jason Lee, co-founder of DailyPay. The company has partnered with G4S, Westgate Resorts, Kroger, Adecco Personaland others in exchange for fees of $1.99 to $2.99 ​​per transaction.

“The thesis here is that when employees can access salaries whenever they want, it creates a major life change,” says Lee. “If they can access the money whenever they want, they can also press a button and then pay their bills on time. Because this is an employer-assigned benefit, the employee actually stays longer.

DailyPay currently has around 500,000 users, who make 1.2 transactions per week. Users receive around $66 in advance pay per transaction, most of which is done at the end of the month. This means that the average user spends a maximum of $3.60 per week in prepayment fees.

Major players in the advance pay market have largely targeted low-wage industries. DailyPay’s Lee and Jon Schlossberg, CEO of Even, say they see the market moving towards white-collar workers as well.

“To pretend that we’re going to magically solve this problem by simply raising wages is to overestimate the impact of raising wages,” says Schlossberg. “Many people who live paycheck to paycheck are already earning more than the median income.”

Nearly 40% of Americans don’t have $400 in their bank accounts, according to a 2019 Federal Reserve study. That forces them to turn to credit cards and payday loans that often come with interest rates. high interest. For payday loans, the cost of repayment is often triple the amount of money borrowed or more, despite federal and state efforts to cap rates.

But some worry that rolling up the pay dates won’t solve the problem of why people live from paycheck to paycheck.

Hitting these workers with new fees to access their money early could make matters worse, says Rachel Schneider, resident of the Aspen Institute’s Financial Security Program.

State laws have been enacted to require employers to regularly pay their workers, but partnering with prepayment providers doesn’t cost many of them a dime, Schneider says. Because prepayment providers pay out the money to users and then collect it directly, employers can continue to process payroll on the two-week cycle without losing interest on the money they pay workers or take on new tax and accounting charges.

“It’s not a rule of thumb to pay every two weeks,” says Schneider. “It’s just that employers would otherwise be happy to delay paying their workers.”

Regulation playing field

California lawmakers are tinkering with legislation that would establish some ground rules for prepayment providers.

A bill passed by the state Senate in May would cap prepayment transaction fees at $14 per month and limit such transactions to three per pay period and 50% of a worker’s unpaid earnings. The measure, backed by PayActiv and other prepayment providers, would also prevent such businesses from being regulated like credit services.

“The Senate bill favors the industry by not allowing it to be treated like a financial institution,” Pedro Ibarra, former COO of PayActiv, told Bloomberg Law. Ibarra recently sued PayActiv, alleging he was fired after reporting the company.

Ibarra questioned PayActiv’s practice of allowing users to obtain cash advances they have not yet earned, according to the lawsuit. He said that made PayActiv a traditional lender, subject to federal and state restrictions and required to disclose fees as interest charges.

“Doing this has the potential to create an ecosystem of users who get trapped there because they keep withdrawing money that they have to pay back later,” says Ibarra.

PayActiv COO Ijaz Anwar called the lawsuit “bogus and baseless,” in a statement provided to Bloomberg Law.

“In some cases (less than 5 percent), an employee may spread the payroll adjustment over two pay periods,” Anwar said. “This option is in place to give users more control over their finances. For example, if a user has an emergency that requires a $400 transaction in one pay period, having the ability to designate a $200 adjustment over two pay periods helps them better manage their cash flow. and avoid more expensive alternatives such as late fees or overdraft fees. . When this happens, the user’s ability to access wages earned in the next pay period is reduced by $200 to ensure paycheck guardrails remain in place.

The company, which says it processed more than $1 billion in advance wages for some 650,000 users, has yet to respond to the lawsuit, which was filed July 2 in Santa Clara County Superior Court in California. .

In March, the New York Department of Financial Services reportedly subpoenaed another prepayment provider, Earnin, for information about the company’s business model. Earnin does not partner with employers to offer its services and collects money directly from users’ bank accounts. The company charges a suggested “tip” of up to $14 per transaction.

The DFS declined to comment, and Earnin did not respond to requests for comment.

Laws in California, New York and a handful of other states tightly limit the deductions that can be made directly from workers’ paychecks. Prepayment providers in these states circumvent these limits by requiring users to sign agreements allowing them to automatically debit front-end funds from their bank accounts on payday.

The services are also designed to avoid tax consequences for employers. By paying the money to a user instead of transferring it from the user’s employer, the payments are not considered an “implied receipt” of wages under federal and state tax laws. This means the employer does not have to immediately withhold income taxes or impose Social Security and other employment obligations on Uncle Sam.

In other words, transactions are tailored so as not to disrupt the traditional two-week payroll cycle.

“Payroll is not going to change,” says DailyPay’s Lee. “The company still runs payroll every two weeks, but the employee can access payroll whenever they want.”

—With the help of Lydia Beyoud.

2019 Payday Loan Algorithm Review


The payday loan industry continues to be a lucrative and popular sector in the UK.

With Google’s SERPs inundated with black hat SEO and hacked sites, the search engine giant responded with a unique payday lending algorithm, which it has continued to develop and refine since 2013, as discussed in the report. review of last year’s payday loan algorithm.

Never before has Google dedicated an entire algorithm to a particular product in such an open way, and at the time it was considered revolutionary.

However, since my last play, the industry has seen other challenges and changes and this has had a profound impact on which companies rank and the type of search terms we see.

Notably, the increase in compensation claims caused the loss of four of the UK’s largest lenders, which opened up the market for other lenders and brokers to capture up to a million additional leads who were previously inaccessible. Therefore, getting to the front page of “payday loans” is still a priority for many businesses and new entrants.

How to Rank for Payday Loans in 2019


Using fresh content is important, as it is with most industries and services. Specifically, for payday loans, using quality landing pages (rather than a home page) is more effective in ranking key terms. Of the top 20 search positions, only three use their homepage to rank, with 17 using dedicated landing pages that use either / payday-loans /, / payday-loans-uk / or / payday-loans- alternative/.

While the mention of using alternatives was very popular last year, it is now only mentioned in two top 20 meta titles.

No comparison tables

Similar to last year, there are still no comparison tables appearing in the top search results, with the closest on page three (all lenders) and not even the main Money.co.uk appearing in the first four pages. Compared to other products such as credit cards and auto insurance, comparison tables are used in the majority of first page ads.

The lack of comparison tables is surprising, given the regulator’s incentive for consumers to use more comparison sites in this space and each lender, by law, to list at least one price comparison site ( PCW) on its home page.

Direct lenders still rule

In the absence of comparison websites, sites classified as “direct lenders” continue to be the top ranked websites, which is why many lenders use this terminology in their metadata, internal links, and content.

Google has clearly favored sites with clear user intent and the ability to find the product and request it in one place, without having to leave. Direct lenders have used several calls to action on their landing pages and it is proving successful.

Links, links and more links

The payday loan algorithm continues to be heavily influenced by link usage and link manipulation. Many sites ranked in the top five and top 10 for payday loans continue to use PBN networks and purchase links with a mix of brand and exact match matches with multiple landing pages. Supplemented with a regular monthly disallowance file, this seems to work well and consistently for various lenders who continue to stay on the front page for over two years.

Elsewhere, new entries have entered the market taking older domains with a strong back links and not necessarily those related to loans or financing. Groups like Omacl, New Horizons, and CUJ have made huge strides in the past 12 months, being virtually unknown and building on strong ties in education, science and technology, which suggests that Google also rewards links from different industries.

Elsewhere, for many direct lenders, they have benefited from buying and selling leads from lead generation brokers such as Quint and subsequently obtained links in privacy policies and terms and conditions (even if no link is necessarily required) from many sites. This has given several lenders a huge boost in rankings and a much higher trust score than other types of links.

Is the market moving towards bad credit conditions?

The stricter FCA requirements have unsurprisingly led to fewer funded loans and more difficult circumstances for those with bad credit. This has increased the number of search volumes for bad credit terms, including bad credit loans (145,000 monthly searches) and other variations such as “bad credit payday loans” (40,500 monthly searches) and “Payday loans without credit check” (27,100 per month searches) – in fact some sites have been optimized specifically to target such terms such as bad credit site and bad credit payday.

Signals of trust and user engagement

While trust signals such as about us pages, FAQs, and contact pages will always be useful for SEO, Google may give weight to other features such as calculators, forms, and contact information. based.

Referring to Wonga.com, the former market leader, they had dominated the top three positions for payday loans for more than five years, but since taking office in November and removing their calculator and background information on loans, today it’s not even just the first 10 pages of Google.

Manual changes by Google

While this is just an urban myth, many SEO pros will hint at the idea that Google is making manual changes and choosing to upgrade and downgrade various sites in the Loans Algorithm. salary.

Following an algorithm change in March and June, we saw some selected sites gain huge improvements and others drop massively. It could simply be the cyclical nature of Google’s algorithms and updates, or Google’s genuine attempts to improve the quality of search results for potential payday loan clients.

Conclusion points to rank for payday loans in 2019

  • Landing pages more successful than home pages
  • Comparison tables less successful than direct lenders
  • Links are extremely important. PBNs are strong and successful links with other industries, although they may be unrelated to loans and finance.
  • Bad credit terms show increased search volumes
  • Confidence signals such as calculators and loan information are essential

Search results are cyclical and subject to algorithm updates.

Daniel Tannenbaum is the CEO of Guarantor Loan Comparison.

Bernie Sanders: ‘Operative’ Payday Loans in Wisconsin Have Average Annual Rate of 574%


Accelerating his latest push for the White House, Bernie Sanders is targeting high interest rates on credit cards and payday loans.

Senator from Vermont introduced a law in May 2019 – with US Representative Alexandria Ocasio-Cortez – that would cap both rates at 15%.

Payday loans are small dollar advances designed to provide emergency funds. They are usually due in full on the borrower’s next payday. Critics say these traders unfairly take advantage of those in financial difficulty with sky-high interest rates.

Sanders, who is running for the 2020 Democratic presidential nomination, focused on those rates in Wisconsin – and several other states – in a May 10, 2019 Tweeter. Here is what he said:

“Average annual interest rates on payday loans:

Delaware: 521%

Idaho: 652%

Nevada: 652%

Texas: 661%

Utah: 652%

Wisconsin: 574%

It’s time to end the predatory lending that keeps Americans in debt. We will cap interest rates on consumer loans and credit cards at 15%.

This implies that Wisconsin’s rates are among the worst in the country for payday loans.

Let’s see where we are and if the 574% interest is correct.

Wisconsin Among Worst States For Payday Loan Rates

Payday loan operators tend to thrive in poor and minority communities, where borrowers struggle to obtain traditional credit.

The loans are ostensibly designed to close the gap until the next payday, but astronomical interest rates – averaging over 300% nationwide – mean most consumers can’t afford to pay it back fully, according to the Federal Bureau of Financial Consumer Protection.

In one month, 70% of payday borrowers take out a second personal loan. And about 20% of borrowers fall into a debt trap that includes 10 or more loans, the office said.

This matches Sanders’ claim that these loans keep consumers “in debt”.

The states of the Sanders lists are those with the six higher annual rates on payday loans according to the Center for Responsible Lending, a non-partisan organization that calls for more guarantees for consumers.

The group calculated the rate for each state referenced by Sanders based on the rate most commonly advertised for a $ 300 loan by each state’s largest payday chains, spokesman Matt Kravitz said. Thus, a state where the four largest lenders have rates of 300%, 400%, 500% and 500% would be listed at 500% since this appears most often.

In other words, it’s not an “average” as Sanders’ tweet claims.

Sanders spokesman Bill Neidhardt confirmed the tweet was based on figures from the responsible loan group.

Wisconsin is one of three states – along with Delaware and Texas – that have no rate limit on short-term payday loans, Kravitz said. Many states cap those rates at around 15%, and the responsible lending group says caps of 36% or less can stop the “payday loan debt trap” cycle.

Other states have recently taken steps to address this issue. PolitiFact Ohio has rated a claim that their state’s payroll laws were the “worst in the country” as True in June 2018. But a law that went into effect in April 2019 rates capped at 28% and limited the frequency and amount of these loans.

Wisconsin figures show lower annual rate

The Wisconsin wage rate cited by Sanders and the Center for Responsible Lending is based on the advertised rates. The actual rates reported to the government are slightly lower.

State Department of Financial Institutions, which regulates the payday loan industry here, said the average rate for 2018 was 486% based on data reported by the lenders themselves. That would mean $ 65.18 in interest charges on a $ 350 14-day loan.

The government limits the interest rate charged after the loan maturity date, capping it at 2.75% per month. Other limits on payday loans in Wisconsin include restricting consumers to loans of $ 1,500 or 35% of their gross monthly income, whichever is less.

Our decision

Sanders included Wisconsin on a list of the nation’s highest payday loan rates. He said Wisconsin had an “average annual interest rate” of 574%.

This matches the numbers reported by a national group that tracks those numbers. But Sanders called this the average rate, when in fact it is the most common “fad” or rate among the largest lenders.

State figures that calculate a real average show a rate of 486% – slightly lower, but still astronomical and still among the highest rates in the country.

These rates can, as Sanders put it, create a cycle that leaves consumers “in debt”.

We rate Sanders’ claim to be fairly true.

Share the facts

2019-05-16 21:28:14 UTC




PolitiFact Rating Logo PolitiFact Rating:

Rather true

Wisconsin Payday Loans Have An Average Annual Interest Rate Of 574%, “Operating Loans That Keep Americans In Debt Trap”


Friday May 10, 2019