During these tough economic times, one type of business is growing....pay day lenders. Pennsylvania Treasurer Rob McCord says that over the last 3 years the number of pay day lenders has quadrupled in Pennsylvania. McCord says that Pennsylvanians who need quick access to short-term loans don't need to "be trapped by the predatory cycle of traditional pay day lenders." McCord says the "Better Choice" loan program created by credit unions in Pennsylvania is particularly valuable to people on fixed incomes and low income individuals who might need an emergency loan when an unexpected expense arises.
A typical $500 payday loan costs the borrower about $950 for 90 days.......$500 for the loan and another $450 in interest and fees charged by the lender. McCord says the Better Choice loan would cost the borrower a total of $42.50 in addition to the $500 loan amount. McCord acknowledges that one of the lures of the pay day lenders is the quickness of the loan. So the credit unions are now making same day loans available. The Better Choice program requires that 10% of the loan is deposited into a savings account to help the borrowers develop a savings habit.