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Stopping the Payday Loan Trap: Alternatives That Work, One’s That Don’t

This report, by the National Consumer Law Center, examines over 100 payday loan alternatives and finds many that are genuine alternatives and others that are a payday loan by any other name. The report describes the history of the 36% rate cap and explains why, to be a safe and affordable alternative to a payday loan, a loan must:

• be under 36% including fees;
• be 90 days or longer;
• have multiple, amortizing installment payments;
• not require coercive security.

The report recalculates the APR for many loans, including fees, and shows how some national banks and credit unions, including federal ones, are offering triple-digit loans that pose the same dangers as payday loans. The report also lists many institutions that are offering affordable small loans.