Action 9: Alternatives To High-Interest Payday Loans Are Available

Some people who are in the need of fast cash are crossing the border to South Carolina, where it’s still legal to take out a payday loan.

The loans are short-term, with interest rates of at least $15 for every $100 borrowed.

One man, who didn't want to be identified for this story, said he borrowed $1,000 six months ago.

He didn't keep up with his payments and said with interest charges, he will end up repaying $3,000 on a $1,000 loan.

“I don’t really like it, but you got to do what you got to do,” he said.

Action 9’s Don Griffin said there are other options for people who find themselves in financial jams.

People who have 401(k) retirement plans can borrow money from them. The interest rate is lower than it is on any kind of other consumer loan.

“And when you pay it back, you're paying yourself back with interest, so it’s a wise way to use those funds,” Bruce Hamlet, a credit expert with United Family Services, said.

Hamlet said consumers who are desperate for cash and can pay it back in a short amount of time might consider cash advances on credit cards. However, he said there is fee associated with that, plus a higher interest rate.

“The cash advance interest rate is a lot higher than your interest for your purchases, so be aware of that,” he said.

Another alternative to payday loans is a short-term loan from a credit union or community bank. The interest rates are as low as 14.25 percent and consumers’ credit history doesn’t have to be perfect.

Hamlet said if none of those options are available and you must take out a payday loan, it’s important to pay it off right away.

“Don’t take out another loan to cover the cost of the first one,” he said. “You'll get trapped.”