“Payday Loans Inc.: Short on Credit, Long on Debt” verifies how what begins as usually a two-week, small-dollar loan becomes a deepening pit of debt lasting on average 212 days in the first year of borrowing and growing to 372 days in the succeeding year. Yet, according to FDIC guidance, no Payday borrower should be indebted for more than 90 days in any 12-month period.

The report also shows how the size of these loans grow over time as well. Although the first Payday loan is typically only $279, the average customer will borrow more in principal and reaches $466 over time. The catch is that as the amount borrowed increases, so do the applicable fees and interest that the borrower must also pay.  According to CRL, much of the problem with fully retiring payday debt is due to the industry requirement that borrowers pay the entire loan with the next paycheck. For most borrowers, this specific loan term denies them the ability to financially manage the rest of their lives.  The financial burden of only having two weeks to repay can be insurmountable. For many borrowers, even a $300 loan eats up all remaining funds after the borrower has paid for just their most basic living expenses, because they have such a short time to pay the loan back.

For example using the latest federal data, our recent report shows that a borrower making $35,000 would have literally no money left over after taxes, basic expenses and the 400 percent payday loan.  So, another payday loan renews the cycle of debt and a steady dwindling amount of available monies for everyday living.

“This new report finds even more disturbing lending patterns than our earlier reports,” said Uriah King, a senior vice-president with CRL. “Not only is the actual length of payday borrowing longer, the amount and frequency grows as well. The first payday loan becomes the gateway to long-term debt and robs working families of funds available to cover everyday living expenses.”

Other independent observers reacted similarly. Rev. Dr. DeForest Soaries, pastor of First Baptist Church, of Lincoln Gardens in Somerset, New Jersey and profiled in “Almighty Debt,” a recent CNN documentary, also commented on the new research findings.  “Reputable businesses build their loyal clientele by offering value-priced products and services. Customers choose to return to these businesses. But Payday lenders build their repeat business by trapping borrowers into a cycle of crippling debt with triple digit interest rates and fees. Lenders should be completely satisfied with a 36 percent interest cap.”

Viewers of “Almighty Debt” may recall how Soaries strongly advocated debt-free living–not only for his congregation but particularly for communities of color. In his view, debt-free living better enables families to build wealth.

Even though Congress enacted a 36 percent annual interest rate cap for active military and their families, to date only 17 states and the District of Columbia have taken similar steps to end predatory Payday lending.  To address the problem of long-term payday debt in other states, CRL recommends ending all special exemptions that allow Payday loans to be offered at triple-digit rates and secondly restoring traditional interest rate caps at or around 36 percent annual interest.  In addition, CRL recommends that both states and the new federal Consumer Financial Protection Bureau limit the amount of time a borrowers can remain indebted in these high-cost loans in any given year.  Further information on the report is available at: www.responsiblelending.org/payday-lending/research-analysis/payday-loans….

At a time when so many people of modest means are striving to financially piece their lives together, dollars are particularly dear. Quick cash may be available from payday lenders. But, there is nothing quick about getting rid of that debt. Borrowers beware.

Reference: OurWeekly.com – New Research, Pay Day Loans Become Gateway to Long Term Debt

If you have Payday Loans that you are struggling to repay or are caught up in the seemingly never ending cycle of renewing loans, DMCC can help.

Click Here to learn about DMCC’s Pay Day Loan Assistance.

Every day consumers are bombarded with cars ads on the radio and on television that grab their attention and get them thinking about trading in their current automobile.  Consumers are targeted with special finance offers such as, “no money down,” or “if you work, you qualify” Some of those ads although true are sometimes misleading. The dealer neglects to state that the interest rates on these loans may be astronomically high, and the cars in these ads may be high mile models, or have a history that could include accident damage.

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MONEY SAVING TIP: Get a free energy audit.

Many utility companies will come out to your house for free or at a nominal cost and tell you how to save money.

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DID YOU KNOW…that when you open credit cards at your favorite stores in order to get the discount, you’re hurting your score?

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Lighthouse Point, FL (PRWEB) April 25, 2012

Debt Management Credit Counseling Corp (http://www.dmcconline.org), a nonprofit charitable organization (DMCC), announced today a new program to assist consumers that are struggling to repay payday loans. The program provides consumers a repayment plan acceptable to their lender at a monthly payment they can afford. Consumers with multiple payday loans outstanding are able to consolidate their loan payments into one lower monthly payment to DMCC. Repayment plans are typically structured over a 6 to 12 month period depending on the total amount of payday loans outstanding. During the repayment plan term, the payday lenders also suspend their collection efforts, providing the consumer relief from harassing collection calls and letters.

Florida residents with outstanding payday loans can get additional relief from DMCC under the State of Florida Payday Advance Law. Under the law, Florida residents are entitled to a 60 day deferment of their payday loan payments, if they complete a credit counseling session with an Approved Provider. Following the deferment period, the payday lender must accept a reasonable repayment plan provided by the credit counselor. DMCC is approved by the State of Florida to provide the required counseling and repayment plans. DMCC sends the required notices to payday lenders and provides the counseling sessions free of charge. Consumers electing to repay their loans through DMCC are charged fees in accordance with state regulations. Approval as a credit counseling agency for payday advance loans does not constitute an endorsement of DMCC, or any other agency, by the State of Florida.

“We are extremely pleased to be able to provide relief to consumers burdened with payday loans”, said Phil Heinemann, Executive Director of DMCC. “Our certified counselors develop repayment plans and budgets for consumers based on their personal finances, with the ultimate goal of providing the consumer the tools and education they need to avoid the need for payday loans in the future.” Consumers interested in taking advantage of this program should call and speak to a DMCC Certified Credit Counselor at (866) 618-3328 or request to be contacted by completing an online application form on the DMCC website.

About Debt Management Credit Counseling Corp.

DMCC is a nonprofit 501(c)(3) organization committed to educating consumers on financial issues and providing personal assistance to consumers overextended with debt. Education is provided free of charge to consumers via seminars, workshops, a proprietary financial literacy program, and a vast array of online and printed materials. Free personal counseling is provided to consumers to identify the best options for the repayment of their debt. DMCC is a HUD Approved Housing Counseling Agency, is approved by the U.S. Trustee to provide bankruptcy counseling and education, and has an A+ rating with the Better Business Bureau.

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Ref:  http://www.prweb.com/releases/debt_management/payday_loans/prweb9433153.htm

FEATURE ARTICLE:  Bottom-shelf bargains at the supermarket

Lots of supermarket chains claim to bend over backward to serve their customers.

But experts say consumers can serve themselves by leaning a bit forward — to find overlooked bargains on the bottom shelves of grocery aisles.

It isn’t where you’re likely to find imported olive tapenade or balsamic vinegar older than a Spanish monastery. But on your next supermarket safari, hunting through the bottom shelf may be the ticket to bagging big savings.

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MONEY SAVING TIP: 5 Things you should always buy bulk

So if you decide to take the plunge and sign up for the membership, you’ll want to take full advantage of the best bulk-buying opportunities these stores have to offer. Here, then, are the things you should always aim to buy in bulk.

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DID YOU KNOW…It’s not good to maintain a balance of more than 30% of your limit?

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Lighthouse Point, FL (PRWEB) March 28, 2012

Debt Management Credit Counseling Corp (http://www.dmcconline.org), a nonprofit charitable organization (DMCC), announced today that it has been awarded a grant of $17,366 from the U.S. Department of Housing and Urban Development (HUD) for providing comprehensive housing counseling in Broward County and Palm Beach County, Florida. In March, HUD announced more than $42 million in housing counseling grants to 468 national, regional and local organizations. The funds awarded to DMCC will be used to provide free assistance to consumers looking to find housing or keep their current homes.

“The HUD-approved counseling agencies this funding supports are crucial in helping struggling families on a one-to-one basis to manage their money, navigate the home buying process, and secure their financial futures,” said HUD Secretary Shaun Donovan. “We fought hard to persuade Congress to restore funding for housing counseling in HUD’s budget and now we’re working to make these important resources available as quickly as possible.”

DMCC is a HUD Approved Housing Agency and an adopter of the National Industry Standards for Homeownership Education and Counseling (NISHEC). The NISHEC are a set of guidelines for quality homeownership and counseling services. Industry professionals who adopt these standards can be trusted to provide consistent, high quality advice. DMCC housing counselors receive extensive training in various housing concerns and are certified by NeighborWorks America and the Center for Financial Certifications.

DMCC’s housing counseling programs consist of pre-purchase home buying, post-purchase non-delinquent home ownership, foreclosure prevention, and homeless services. All these programs are provided to consumers free of charge. DMCC also provides budget counseling and assistance to consumers struggling to repay unsecured debt, including debt management plans to lower credit card interest rates and payments.

About Debt Management Credit Counseling Corp.

DMCC is a nonprofit 501(c)(3) public charity committed to educating consumers on financial issues and providing personal assistance to consumers overextended with debt. Education is provided free of charge to consumers via seminars, workshops, a proprietary financial literacy program, and a vast array of online and printed materials. Free personal counseling is provided to consumers to identify the best options for the repayment of their debt. Consumers interested in speaking with a DMCC Certified Credit Counselor may call (866) 618-3328 or request help at dmcconline.org. DMCC is a HUD Approved Housing Counseling Agency, is approved by the U.S. Trustee to provide bankruptcy counseling and education, and has an A+ rating with the Better Business Bureau.

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Ref:  http://www.prweb.com/releases/credit_counseling/debt_management/prweb9336751.htm

In recent years, the economy has forced millions of Americans into bankruptcy, many of which started out falling behind on payments, followed by increased debt as a direct result of unemployment, medical bills, divorce, lawsuits, etc. You may not have power over such events, however, how you manage your debts before they escalate is within your control. Bankruptcy is the least desirable option for consumers and for most, a last resort.

There are two primary alternatives to bankruptcy for high credit card balances and past due payments; Debt Management Plans (DMP) and Debt Settlement Plans (DSP).

Consumers who have credit card debt that’s LESS than 90 days past due may prefer to enroll in a Debt Management Plan because:

-  Monthly payments are consolidated into ONE lower payment

-  Creditors REDUCE credit card interest rates

-  Creditors STOP their collection calls

-  A POSITIVE payment history is established on credit reports

-  Creditors STOP charging past due and over-limit fees

-  Enrolled debt is paid off in 5 years or LESS

Consumers who have credit card debt that’s MORE than 90 days past due may prefer to enroll in a Debt Settlement Plan because:

-   Accounts are settled in-full for LESS than the amount owed

-   Monthly payments required to fund settlements are LOWER than DMP payments

If you are ready to take control of your past due debts, click here to request our free “Debt Repayment Options” educational guide. This free guide will teach you the basics of  debt management and debt settlement plans, as well as other options to repay your debts. If you think a debt management plan or debt settlement plan may be your best solution, our certified credit counselors will provide you a free no obligation quote.

About Debt Management Credit Counseling Corp.

DMCC is a nonprofit 501(c)(3) public charity committed to educating consumers on financial issues and providing personal assistance to consumers overextended with debt. Education is provided free of charge to consumers via seminars, workshops, a proprietary financial literacy program, and a vast array of online and printed materials. Free personal counseling is provided to consumers to identify the best options for the repayment of their debt. Consumers interested in speaking with a DMCC certified credit counselor may call (866) 618-3328 or request help at dmcconline.org. DMCC is a HUD Approved Housing Counseling Agency, is approved by the U.S. Trustee to provide bankruptcy counseling and education, and has an A+ rating with the Better Business Bureau.

The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans, cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans. The Federal Trade Commission, the nation’s consumer protection agency, says that regardless of their name, these small, short-term, high-rate loans by check cashers, finance companies and others all come at a very high price.

Here’s how they work: A borrower writes a personal check payable to the lender for the amount the person wants to borrow, plus the fee they must pay for borrowing. The company gives the borrower the amount of the check less the fee, and agrees to hold the check until the loan is due, usually the borrower’s next payday. Or, with the borrower’s permission, the company deposits the amount borrowed — less the fee — into the borrower’s checking account electronically. The loan amount is due to be debited the next payday. The fees on these loans can be a percentage of the face value of the check — or they can be based on increments of money borrowed: say, a fee for every $50 or $100 borrowed. The borrower is charged new fees each time the same loan is extended or “rolled over.”

The federal Truth in Lending Act treats payday loans like other types of credit: the lenders must disclose the cost of the loan. Payday lenders must give you the finance charge (a dollar amount) and the annual percentage rate (APR — the cost of credit on a yearly basis) in writing before you sign for the loan. The APR is based on several things, including the amount you borrow, the interest rate and credit costs you’re being charged, and the length of your loan.

A payday loan — that is, a cash advance secured by a personal check or paid by electronic transfer is very expensive credit. How expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115, with $15 the fee to borrow the money. The check casher or payday lender agrees to hold your check until your next payday. When that day comes around, either the lender deposits the check and you redeem it by paying the $115 in cash, or you roll-over the loan and are charged $15 more to extend the financing for 14 more days. If you agree to electronic payments instead of a check, here’s what would happen on your next payday: the company would debit the full amount of the loan from your checking account electronically, or extend the loan for an additional $15. The cost of the initial $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Alternatives to Payday Loans

Before you decide to take out a payday loan, consider some alternatives.

1. Consider a small loan from your credit union or a small loan company. Some banks may offer short-term loans for small amounts at competitive rates. A local community-based organization may make small business loans to people. A cash advance on a credit card also may be possible, but it may have a higher interest rate than other sources of funds: find out the terms before you decide. In any case, shop first and compare all available offers.
2. Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR. Military personnel have special protections against super-high fees or rates, and all consumers in some states and the District of Columbia have some protections dealing with limits on rates. Even with these protections, payday loans can be expensive, particularly if you roll-over the loan and are responsible for paying additional fees. Other credit offers may come with lower rates and costs.
3. Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith. They may offer an extension on your bills; make sure to find out what the charges would be for that service — a late charge, an additional finance charge, or a higher interest rate.
4. Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost. You may want to check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.
5. Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. At the same time, try to build some savings: small deposits do help. A savings plan — however modest — can help you avoid borrowing for emergencies. Saving the fee on a $300 payday loan for six months, for example, can help you create a buffer against financial emergencies.
6. Find out if you have — or if your bank will offer you — overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems. Find out the terms of the overdraft protection available to you — both what it costs and what it covers. Some banks offer “bounce protection,” which may cover individual overdrafts from checks or electronic withdrawals, generally for a fee. It can be costly, and may not guarantee that the bank automatically will pay the overdraft.

The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck — and still have enough to make it to next payday.

MONEY SAVING TIP:  Break your restaurant routine

This may seem obvious, but we are creatures of habit and convenience. Make an effort to cut back a little, such as dining out once a week instead of three nights a week. With $20 meals, this simple act will trim your expenses by $160 a month.

Or, try something different –- and cheaper. Pick up a restaurant guide or a tour book of your city for budget-friendly suggestions. If you eat out three times a week, cutting just $5 from each meal ticket will save you $60 a month.

DID YOU KNOW…Military consumers have certain protections with payday loans?

Payday loans (and certain other financing) offered to servicemembers and their dependents must include certain protections, under Federal law and a Department of Defense rule. For example, for payday loans offered after October 1, 2007, the military annual percentage rate cannot exceed 36%. Most fees and charges, with few exceptions, are included in the rate. Creditors also may not, for example, require use of a check or access to a bank account for the loan, mandatory arbitration, and unreasonable legal notices. Military consumers also must be given certain disclosures about the loan costs and your rights. Credit agreements that violate the protections are void. Creditors that offer payday loans may ask loan applicants to sign a statement about their military affiliation.

Even with these protections, payday loans can be costly, especially if you roll-over the loan. You instead may be able to obtain financial assistance from military aid societies, such as the Army Emergency Relief, Navy and Marine Corps Relief Society, Air Force Aid Society, or Coast Guard Mutual Aid. You may be able to borrow from families or friends, or get an advance on your paycheck from your employer. If you still need credit, loans from a credit union, bank, or a small loan company may offer you lower rates and costs. They may have special offers for military applicants, and may help you start a savings account. A cash advance on your credit card may be possible, but it could be costly. Find out the terms for any credit before you sign. You may request free legal advice about a credit application from a service legal assistance office, or financial counseling from a consumer credit counselor, including about deferring your payments.

Military consumers can contact the Department of Defense, toll-free 24 hours a day, 7 days a week, at 1-800-342-9647, or atwww.militaryonesource.com. Information on the Department of Defense rule, alternatives to payday loans, financial planning, and other guidance is available.

www.ftc.gov

I had heard on the radio that just making minimum payments on your charge cards could take you 30 years to get them paid off.  That day I heard a commercial about DMCC and stopped at a convenience store and called them. They got me set up and they took $400 each month out of  my bank. It was the best decision I ever made. As I got a card  paid off, they moved more to paying off another card. It was a hard  lesson to learn but it paid off in the long run. I am now debt free and do not have a charge card of any type. I
have my debit card and if I don’t have the money in the bank, I don’t spend the money. DMCC was always very helpful and worked with me all along the way.  I will always be grateful to them and the commercial I heard that day.

Patti

Has a DMP changed your life for the better? We want to hear your story!

Email your experience to nmolina@dmcconline.org and put “How a DMP changed my life” in the subject line.

Initially, I was extremely leery about getting help, the stigma that a debt counseling/ consolidation company would harm credit and signal creditors credit reports caused me to delay.  After facing financial difficulty; depending on credit cards was no longer an option. I’d seen a commercial on T.V. called DMCC Feb. 2004. I still remember the reps name. Her name was Hope, ironically, that’s just what I needed. After researching reviews, speaking with DMCC’s knowledgeable representative(s), and reviewing Better Business Bureau of the United States, I made a decision to go for it. Attempting to pay my debt singlehandedly with the minimum payments would’ve taken me 11 years to payoff. 

DMCC faxed me detailed printouts describing my entire debt payoff in 5 years. They were extremely patient and willing to help me appreciate that it wouldn’t harm my credit, it fact it was a benefit for my creditors because they received a tax credit for working with the non-profit DMCC and wouldn’t reflect or show up on my credit report. That was all I needed to hear. I joined and began paying the same minimum balances due; I was not affected or inconvenienced. It was a benefit ALL THE WAY. I highly recommend turning your debt to DMCC. They are hardworking, dedicated, and professional. For example, during a natural disaster that struck their area (all over the news stations) they informed me that they’d already contacted my creditors advising them of the situation and how their company was shut down for a couple days, albeit they still made my payments on time. I am so grateful to them. I tell all my coworkers, friends, and family about them. I completed the program back in 2009 and my credit is in excellent shape. Nothing reflects joining a debt management company; it shows I’ve paid my debtors. I had to share my story.

Jeanette, Oakland CA

Has a DMP changed your life for the better? We want to hear your story!

Email your experience to nmolina@dmcconline.org and put “How a DMP changed my life” in the subject line.