One of my team members brought me a super convenient new way to get into trouble with payday type lending. In the mail, she received a check for $800 with a letter attached with pictures of Santa Claus and other Christmas designs. Let’s face it, the Christmas season can be hard on the wallet and many of us could use some extra money to provide a merry Christmas for our families.
If she had deposited that check for $800, she would have been agreeing to a loan with an annual percentage rate of 91.02% and a $370 finance charge with total repayment of $1,170 in 10 payments. The most a credit a credit union can charge per the law is an annual percentage rate of 18%. We offer several alternatives to this type scenario that would save you money:
- Christmas Club Accounts. Save a small amount each month and we release the funds in November. Amount of interest paid = $0
- Get our Holiday 12-12-12 loan. You can get up to $1200 for 12% annual percentage rate with repayment up to 12 months. Let’s use the $800 example from above with 10 payments. Your total amount of interest paid on the same $800 is $44.66.
- Open a credit saver loan this year in November or early December and next year at the same time when the loan is paid off, you’ve got Christmas money. On this type of loan we front the money to open a term share account with an annual percentage rate 3% above the current rate on the matching term share rate.
The best thing my team mate did was shred the check. I hope our members will always contact their credit union first to see if we can help you instead of falling into the trap of predatory lending. After all, you are not just a customer, you are a member-owner and we have your best interest at heart.