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Payday Loans Versus Alternative Options

There are many alternative options when it comes to payday lending. However, when you are in need of fast cash, a payday loan advance is the fastest and easiest way to get a loan to pay off your unforeseen expenses. Some people fall into a vicious cycle of debt when they take out payday loans. However, these borrowers do not use their payday loans responsibly. With irresponsable users, the Des Moines City Council has taken notice and want borrowers to become less dependent upon payday loans with the creation of a “Bank On” program.

This “Bank On” program was set up to help people who are in a low income situation to take out a payday loan which may put them in danger of debt. This program provides financial services to these people without putting them in the vicious cycle of debt from not paying back a payday loan. Des Moines is not the only city that has this “Bank On” Program in place. In fact, there are more than 20 other U.S. cities that have this program. This program has the support of the Mayor of Des Moines, Frank Cownie and the Councilwoman, Christine Hensley.

This program helps out lower economic classes so that they break their dependence on payday loans. Many of these people are uneducated about payday loans and banking in general. This program helps to create savings and checking accounts which will help these people to get traditional sources of borrowed money. Alternative financial institutions work with the Bank On program which help to meet the needs of these individuals.

In Des Moines alone, this program could help at least 16,000 people. Interest rates for payday loans can be anywhere from 300 to 2500 percent. Normally, a payday loan is a short term loan which is paid back when your next paycheck arrives. For responsible users, a payday loan is the perfect solution to short term financial problems. However, since people are not taking the time to understand payday lending, the Bank On program is a great alternative to prevent low income residents from falling into a cycle of debt.