Oregon Offers Alternatives to - and Education About - Payday Loans
Some in Oregon believe payday loans are not a bad thing. They're entitled to their opinion, but Governor Ted Kulongoski does not share it.
On Thursday, he announced a new consumer campaign - including a 1-800 hotline and website - promoting instant payday loan alternatives and encouraging working Oregonians to avoid these high-interest cash advances.
"We've made real progress protecting hard-working Oregonians from high cost payday loans," said the governor. "But these new tools will help get this important message out - there are better alternatives for consumers than payday loans charging up to 500 percent interest."
In April, Kulongoski signed legislation establishing reasonable limits on payday loan lending charges to protect consumers from excessive price gouging. The law takes effect in July 2007.
These new tools are another step in the cash loan fight. They offer consumers good information and options to avoid spiraling debt. By calling 1-800-SAFENET or visiting www.211info.org, individuals can find information about cheap payday loan products offered by Oregon credit unions with significantly lower interest rates and fees.
Many credit unions began launching such resources two years ago, after Governor Kulongoski asked them to offer consumers a less-expensive option for short-term loans. With interest rates often more than 500 percent, payday loans create financial burdens and credit problems for consumers.
As an alternative, credit unions average a $3 cost to the consumer for a 30-day, $200 personal loan. If that consumer went to a payday lender for the same loan, the cost would be between $60 and $85.
"I appreciate the Governor's leadership in protecting vulnerable consumers. And we are extremely pleased that Oregon's credit unions are providing financially strapped consumers real options," said DCBS Director Cory Streisinger. "Our research shows many Oregon consumers have multiple payday loans and often extend the payback period, which means they are paying an exorbitant amount of money in interest rates and fees.
Consumers will save more than money when borrowing from credit unions, said Gene Poitras, president of the Credit Union Association of Oregon.
"Credit unions care about the financial well-being of their members and can work with borrowers to help them get out of debt," he said, adding that credit unions also can help consumers by offering financial education resources to avoid bad credit payday loans.