LUBBOCK, TX (KCBD) - NewsChannel 11 investigates put Payday Loans to the test back in May. We wanted to know if they really make life easier or are they setting customers up for financial disaster with annual rates in the triple digits. Now Texas Credit Unions are taking action, offering an alternative to Payday Loans. NewsChannel 11's Investigator, Nicole Pesecky has been digging up the details.
If you're not careful, it's no secret Payday Loans can get you into trouble. Nan Campbell with the Better Business Bureau says Payday Loans should be your last resort. Soon there will be a substitute when you need quick cash instead of heading to a Payday Loan store.
All of us could use some extra cash at times, but instead of walking into a Payday Loan shop, borrowers will soon have a new option at Credit Unions around the state. Real Solutions, creators say it's the solution to reoccurring debt.
This alternative focuses on saving people money so they don't get stuck in a bind with their lenders. Natasha Melugin, the director of Real Solutions says, "It's a much better alternative just because of the cost, they're going to be saving about 80% of the fees as opposed to the fees that would be paying at a payday lending."
Another pro is you build credit with this program. "If someone is using a payday lender they're not necessarily able to build credit with it even if they always pay it on time. It's not a positive reflection or any reflection on your credit report," Natasha explains.
Plus, you're required to use the savings component. "10% of the loan will be put into a savings account and frozen until the loan is paid off," Natasha tells us. And unlike payday loans, which are virtually unregulated in Texas. This plan caps interest rates at 18%. And you're able to pay back in installments, so you're the one that gets to cash in instead of Payday lenders.
This program won't be offered at every Credit Union in the state, we're told there are 50 that will release it in the 4th quarter. So far we've confirmed that Real Solutions will be offered at Credit Unions in Lamesa and Slaton.
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