1. Pay Day Loans Need $500 Get paid in two weeks (ex Jan 23) Go to a Pay Day Lender Ask for $500 – – They want to see pay stubs – Bank Acct statements – You write a check for $575 ($500 loan + $75 fee) – Date the check for Jan 23

2. Jan 23 arrives – You either come in with $575 cash (they return your check) or They simply cash the check you wrote …so what’s the problem? 1.Effectively charging you 390% APR … Huh…? $75 fee is 15% of 500….. But….it is due in two weeks

3. On an annualized basis (APR) - it is essentially 15% x 26 (two week periods in a year) = 390% 2 nd Problem – Often, if people try to pay $575 from their pay check, they are left with very little to cover other essential costs (rent, food, car payments etc..) ….so …. They end up getting another loan …..or …… They can not pay the $575, so they get a loan for $575 + $75 fee = $650 So in two weeks they now owe $1225

4. Many enter a cycle Target low income neighborhoods Predatory Lending "imposing unfair and abusive loan terms on borrowers."

5. ….so I have no savings, and credit cards are maxed, what do I do? Credit unions and some smaller banks are offering pay day advances but with monthly pay back and limited interest rates (12-20%) – Take portion of payments to establish a savings account for you

6. Borrow from friends and family Negotiate with who you owe to set up a payment plan If not maxed on credit cards – get cash advance …..(25% not great but better than 300-500%) Not immediate solutions but…. Credit counseling Personal Finance education Disciplined saving and spending habits