If you make a good salary and feel comfortable with your job security, then you’re very much in the minority in America. For most, the American dream is just that: a dream. The fact is that nearly 4 in 5 people are living paycheck to paycheck right now.
Except that “right now” doesn’t account for the COVID-19 pandemic. Many economists predict that unemployment rates might go as high as 30%. A lot of people will be in very deep trouble. (For reference, the unemployment rate during the 2008 housing crisis hit 10%. During the great depression, that rate peaked at just under 25%.)
Short-term lending was already a $12b industry. With the kind of early unemployment numbers the U.S. is seeing, you can expect that industry to grow. And that industry will not be kind to borrowers.
The average payday lender in America charges a 400% annual interest rate.
For people struggling to make ends meet, get back on their feet, or just make it until their industry recovers, a 400% interest rate poses a significant, long-term burden. They could be faced with insurmountable debt that destroys their future financial viability.
But they may have little choice.
Unless credit unions step up. Yes, a one-time stimulus check will defray some living costs. And yes, expanded unemployment coverage with keep many afloat. But those solutions won’t help everybody, and they don’t leave much of a safety net. Even those of us who have kept their employment during this crisis have fewer options than we did before.
Borrowing is one of QCash’s five pillars of financial health. They help credit unions offer instant short-term lending options to members in need. Their platform supports Payday Alternative Loans with very reasonable terms.
Usually, we speak about small, personal loans and short-term lending in an abstract sense. Today, we must present the topic with urgency.
To learn more about how borrowing fits into member financial health—and how QCash is addressing this need—follow the link below.