Financial reform goes after consumers who need pay day loans

a sign depicting a hand reaching for money with a slash through it

People who need pay day loans are being singled out in a financial reform bill created to reign in greedy Wall Street banks. Flickr photo.

Pay day loans have been targeted by Congress in its financial reform bill. Pay day lenders wonder why a financial reform bill made to stop the crimes of filthy rich Wall Street bankers goes after a financial service that helps ordinary people. The fact that pay day loans are part of the financial reform bill shows that the cash industry is looked on with disdain by politicians, bankers and a lot of overpaid people with cushy jobs who vote. Most of the rest of us might feel the same way about pay day loans — most of the time. But if you’ve ever needed a pay day cash advance, for any good reason, you were probably glad you could get one.

Credit when you need it most

Pay day lenders have provided a lifeline to working people when no one else will. Used responsibly, pay day advances can get people out of a financial jam and  help them preserve their good credit and start building a good credit history. Greedy banks and wealthy speculators that triggered our most recent recession have made life very difficult for most Americans. They’re making it worse by ensuring that credit is nearly impossible to get for the average working person. Even in better times, the more one needs credit, the harder it is to get. People who make plenty of money to live on and then some get invited to borrow money by banks every day.

Cheap pay day loans under fire

What’s interesting about financial reform is that politicians don’t necessarily want to regulate the pay day lenders. Believe it or not, they’re going after the borrowers. Proposed federal regulation would limit consumers to six loans in a 12-month period. Another provision would require lenders to offer extended repayment plans, which they already do with installment loans. The Salt Lake Tribune reports that a counter proposal has been submitted to exempt payday lending from federal oversight, so it’s unclear whether the six-loan limit measure will succeed.

Responsible payday lending

Federal regulators want to go after pay day lenders. But the industry promotes its own best practices with the Community Financial Services Association of America. CFSA member companies are required to comply with Industry Best Practices that ensure consumer protections and responsible payday lending to all customers. Another group committed to preserving affordable access to short term credit for millions of Americans is the Online Lenders Association. Before you arrange your cash til payday loan, make sure your money lender is a member of either the CFSA or the OLA.

Responsible debt survival

If you do your homework, pay day loans can be the difference in debt survival. By planning ahead, you can be certain that you can pay your bills and pay the loan in full with your next paycheck. If that’s not possible, consider an unsecured personal loan for debt survival. An unsecured personal loan allows you to pay back your loan amount in monthly installments rather than with your next paycheck. Be sure to take advantage of the resources provided to consumers by the CFSA and the OLA. The CFSA offers helpful tips on making a budget, saving money and building credit. The OLA offers a step-by-step approach on how to use pay day loans the right way.