Lower-income consumers have a lot of problems. They often need more money. There is no shortage of people trying to help them get it – for a price.
Lenders impose high-interest payments penalties and fines on borrowers. New laws now make it harder to mislead consumers.
The banks that issue credit cards have not given up in the face of these new laws. Lenders who make short-term payday loans have not given up.
One example is deferred-interest promotions by credit card companies. These are credit card loans that allow you to delay paying interest on the loan. If you pay the loan off within a certain period, you will not have to pay any interest on the loan.
It is not that easy. Let us say you make “minimum” payments. At the end of the loan payment period, you find that you have not paid off the whole loan. Then you have to pay interest on the entire loan. It will cost you a lot.
Beware of stores offering you deferred payment on interest deals.
There is some hope for people who use credit cards. A new Internet site called NerdWallet has just started. It finds the best credit card deals for people with different credit needs. Use of NerdWallet does not cost you anything.
The people running NerdWallet are smart and sincere. They reveal that part of their income is from the credit card companies they recommend.
Some big public pension funds finance many of the payday lenders. For example, a New Jersey state pension fund invests in companies that fund payday loans. Payday loans are illegal in New Jersey! The founders of NerdWallet come from big Silicon Valley companies. They say this is a way for them to do good.
Consumers will do themselves a great favor by doing the arithmetic before they borrow or buy.