More bad advice on short-term loans
November 26, 2008 | alternatives, industry | Comments (0)Instant shift offers this advice to consumers:
The best advice If you’re really in a pinch, opt for a cash advance on your credit card (about 28 percent in interest, plus transaction fees). If you belong to a credit union, you can usually get up to 18 percent interest on small unsecured loans. As an alternative to payday borrowing, The FDIC launched a pilot program in February in which 550 banks branched in 27 states will offer loans of up to $1,000 at an APR of up to 36 percent. That’s high, but it beats 500 percent.
What they fail to mention is that while banks and credit unions may offer credit with rates less than 36% APR, they also add in annual fees, application fees, transaction fees, etc…When you add up the total cost of the loan, it is clear why the $15 per $100 charged by payday lenders is a popular option.
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