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What’s the problem with payday loans?


  • In 2008, Wisconsin had 542 payday lenders that made 1.6 million loans totaling $722 million.

  • Payday lenders charge exorbitant interest rates – There is no limit on the interest rate payday lenders can charge, and many borrowers pay these inordinately high rates without realizing they can get small loans less expensively elsewhere.

  • for targeting people in low-income areas.  

  • because most of them are not locally owned.


What’s the REAL Solution?


  • Wisconsin credit unions responding to a League survey say they already offer loans at rates of interest below 36% (the federal cap on such loans to military personnel) to help members who might otherwise take out a high-cost payday loan.


  • Wisconsin credit unions grant loans of $500 to help a member and nearly three-quarters of all credit unions will grant loans for even less.


  • For example, their loans may include education or counseling, require some savings, allow a longer time frame for repayment than two weeks, and limit rollovers to encourage timely repayment and improved creditworthiness for borrowers so they can qualify for lower rates.


  • Credit unions also identify underlying issues to help borrowers long term, such as referring them to community resources (for food, clothing, health services, etc.) to stretch a budget. For example, offers links to state health and nutrition resources.

  • Credit unions offer loan options to suit borrowers of varying credit quality. People with good credit typically qualify for a more traditional loan at a credit union, so credit unions steer those borrowers to the lowest rates for which they qualify. For those with more troubled credit, credit unions offer special loan programs that offer rates that are still just a fraction of those offered by storefont lenders, like the League’s turnkey solution called StretchPay, or have developed programs of their own. Credit unions’ offerings take into account people of all income and credit levels, because all working people may at some point need short-term credit solutions.


Additional Payday Loan Resources




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