Posted by:
ragnar
(
)
Date: December 12, 2019 08:34AM
When I worked at a retail store (in Idaho), a fellow worker (non-Mormon) used these payday loans ALL THE TIME. She usually borrowed $200 to $300 at a time, and was paying 16% for each 2-week loan. She was contantly rolling over her loans, paying just the interest ($32 for a $200 loan, and $48 for a $300 loan, for example).
I watched her do this for MONTHS. She was not shy about talking to use about this, and I saw that she was dependable in paying off the loans and interest.
After a year or so, I offered her a 'deal'. I said that - instead of using a payday loan company - I would lend her this money, but at 10% instead of 16%.
She would save money with this situation (and I could make money).
She took my offer. Soon, she was rolling over an average of $300 every 2 weeks with me. Every time she paid interest, I put that money in a savings account in the bank.
This went on for a couple of years.
Whenever she got her federal tax refund, she would pay off her loans and she remained solvent for a few weeks. But after 4 or 5 weeks, she started borrowing again.
I guess I could be faulted for taking money from her in this manner, but I did save her some money she would have otherwise given to a payday loan company.
One year she told me that she was getting a tax refund of $3,000. (mainly Earned Income Credit). She had a husband and a daughter.
I asked her if she could use an extra $250 of income per month. She said that if she could get this much of a raise, it would solve many of her money problems. I then suggested that - when she gets her refund this year - that she put the entire $3,000 in the bank. Then, she could withdraw $250 per month from this account to spend or do whatever. This could be her 'raise' and the money would last the entire year - she wouldn't have to borrow and pay interest each month.
She told me that she knows this and understood how this would work, but she said she could never do this. She told me that if she has money, she HAS to spend it. She was apparently incapable of saving money.
Once, she got a credit card offer in the mail. She completed the form and returned it, and they sent her a card with a $2,000 limit. She and her husband charged up to the limit within a couple of weeks. She said she made one payment on it, and then just stopped. Her comment was that if the bank was foolish enough to send her a card with her bad credit history, they 'deserved' to lose the money.
Two other employees started asking to borrow money from me under similar terms. I started loaning to them, but they soon became undependable in their repayments, so I stopped.
We worked together a few years. When I moved out of town, I used the 'interest money' that she had paid as part of my down payment on a house purchase.