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Bank-Based Small-Dollar Loans: An Alternative to Payday Loans

Robert Wilkinson — Tue, 09 Nov 2010 03:20:05 +0000

Payday loans — your neighborhood loan shark in a retail box — have emerged as a hugely profitable underbelly to the banking business. Short-term loans with off-the-scale annual percentage rates that can exceed 500 percent are a growth industry in tough economic times; the industry raked in 42 billion dollars last year. Gary Rivlin, author of From Pawnshops to Poverty, Inc.: How the Working Poor Became Big Business, reports that the United States now supports more payday loan outlets than McDonald’s and Burger Kings combined. The FDIC would like to counter the trend with legitimate loan products designed to serve the “underbanked” lower income sector.

A recently concluded Small-Dollar Loan Pilot Program conducted by the FDIC featured loans that offered terms designed to beat those offered by payday sharks. Terms looked like this, according to the FDIC website:

Product Element	Parameters
Amount	$2,500 or less
Term	90 days or more
Annual Percentage Rate (APR)	36 percent or less
Fees	Low or none; origination and other upfront fees plus interest charged equate to APR of 36 percent or less
Underwriting	Streamlined with proof of identity, address, and income, and a credit report to determine loan amount and repayment ability; loan decision within 24 hours
Optional Features	Mandatory savings and financial education

The 2-year pilot program involving 28 banks expired in 2009. The trick now is to find a bank that will make a small-dollar loan based on this template. Big banks like Wells Fargo have not signed on to the program, preferring to stick with more lucrative — and less consumer-friendly — cash advance programs with APRs up to 120 percent.

Most small-dollar loans are for amounts in the range of $500 to $1,000 for periods of one year. Under the pilot program, banks used a small percentage of the loan proceeds to start a mandatory savings account that could not be accessed until the loan was nearly paid off. The idea behind this practice was to help the borrower start an emergency savings account to reduce the need for future loans.

To find a small-dollar bank lender in your area, check your local listings for small regional or community banks, ask for the loan desk, and request the loan profile using the information in the chart above. But if you can’t find a bank in your area that offers a small-dollar loan program, don’t be too surprised. Bank-originated small-dollar loans may be an idea whose time has not yet come.

FDIC Touts the Baltimore Model

FDIC staffers ...

Best Money Tips: Save Money on Plus-Sized Clothing

Robert Wilkinson — Sat, 25 Sep 2010 06:20:05 +0000

Welcome to Wise Bread's Best Money Tips roundup. Today, we tell you how to shop for plus-sized clothing, why corner lots may be for suckers, and how to prepare for an evacuation from your home.

Best Money Tips: 7 Worthless Excuses for Not Saving

Robert Wilkinson — Tue, 31 Aug 2010 05:20:05 +0000

Welcome to Wise Bread's Best Money Tips roundup. Today, we destroy all those lame excuses for not saving, help you shop for a laptop, and give you the facts behind MLM opportunities.

Going Green Could Mean More Money In Your Pocket

Robert Wilkinson — Sun, 11 Jul 2010 04:20:05 +0000

With vironmenenrecently, it's easyfeel helpless about the state of our globe. You might really feel annoyed and even compelled to protest the big image issues we've been encountering. But rather than fall into this mood, I'd like to suggest that we get a look at these issues we have a bit much more handle more than.

How about we revisit these issues that we can truly do in the figure out of heading green? I'm hoping that in some ability, the little actions might add up. Obtaining handle more than some issues might help assuage some of the frustrations we really feel. Following all, we've presently covered a couple of ideas for heading green and saving money at the precise same time. How about a couple of much more simple moves that we can do about the house?

Watch These Power Expenditures

Let's start with the apparent. Your electrical energy bill: if there had been issues you could do to go green that could also deliver your utility bill down, wouldn’t you want to do them? But of plan! So let’s get began in that route right now.

Initial, you need to get in the conduct of turning your thermostat down. Even carrying out this by just a couple of of degrees can make a dent in your electrical energy bill, and you'll hardly uncover the distinction in your house. But in scenario you do, you can generally throw on a sweater till you turn out to be accustomed to it.

You can also select to unplug your electronics, particularly "power vampires," or appliances that are large power clients. Even though it's been noted to conserve only about 30 to 60 kilowatt hrs a month in an common house, you might want to do this much more for the sake of decreasing CO2 emissions. Some factor as simple as utilizing a power strip might simplify how you're in a location to handle your power utilization.

When it arrives down to precisely where your power hogs are ...

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Best Money Tips: 10 Best No-Alcohol Drinks

Robert Wilkinson — Thu, 08 Jul 2010 01:20:06 +0000

Welcome to Wise Bread's Best Money Tips roundup. Today, we share some fun drink recipes even the kids can enjoy, how to keep your SSN safe, and why you should be extra careful when checking into hotels.

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10 Best No-Alcohol Drinks — Signed up to be a designated driver at your next party? No problem. With names like “The PacMan,” these drinks are just as cool as their spiked counterparts. Casual Kitchen

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Get Your Boss to Let You Work from Home — Thinking of making the request for telecommute privileges? Here are some great tools to get you started! My Life Scoop

Mastering Recurring Responsibilities — Has remembering to consistently clean the bathroom (or any other chore) got you down? Take these very practical and effective tips to heart. You can do it! Unclutterer

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Best Money Tips: Living on One Income

Robert Wilkinson — Sat, 08 May 2010 10:20:06 +0000

Welcome to Wise Bread's Best Money Tips roundup. Today, we offer some insight on living on one income, how to cook up some amazing pasta puttanesca, and how to replace the air filter in your car!

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Living on One Income — I love this account of one blogger’s experience with downsizing to one income. The perks may be worth considering — even if it means a tighter budget! The Centsible Life

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Three Things the Amish Taught Me about Money — This is one of those you just have to read to understand. Great food for thought! Get Rich Slowly

Pasta Puttanesca — This very affordable dish is simply mouth-watering! Get the recipe here. Cooking With Amy

How to Replace the Air Filter in a Car — A simple, easy fix that can keep your car running for years, this is super-affordable if done from your own garage. 20 Something ...

Best Money Tips: 18 Common Phrases to Avoid in Conversation

Robert Wilkinson — Sat, 01 May 2010 02:20:08 +0000

Welcome to Smart Bread's Greatest Money Suggestions roundup. Today, we let you in on issues you shouldn't say in conversation, how to make a peanut butter cup cake in a slow cooker, and how to score totally free comics on Might 1st!

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18 Typical Phrases to Steer clear of in Conversation — Ought to you actually tell someone “Wow! You’ve lost a ton of weight”? Apparently, not. Here’s what you should say, rather. Real Easy

My Plant Has Wilted! What Do I Do? Before you h2o, study this post. It might be the final thing you want to do. Existence on the Balcony

Slow Cooker Peanut Butter Cup Cake Recipe — Wager you didn’t even know you could cook cake in a crockpot! Here’s one of the most delicious recipes I’ve arrive across for a slow-cooker but! A Year of Slow Cooking

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Best of Personal Finance Roundup: DIY Hotdog and Hamburger Buns

Robert Wilkinson — Wed, 31 Mar 2010 23:20:04 +0000

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Homemade Hamburger and Hotdog Rolls — Where’s a good hotdog bun when you require 1? How about generating your own? This recipe is easy-peasy. Frugal Upstate Via Becoming Frugal

The Secret to Falling In Adore with Your Home All Over Again — This publish is sweet, and reminds us of what is truly essential when purchasing a home. Frugal Dad

4 Methods to Keep Winter Clothing Pristine in Storage — You have all your sweaters, but what do you do with them till subsequent yr? Follow these suggestions for clear and comfy duds when you require them! Divine Caroline

Warren Buffet on the Lottery of Birth — This is an issue I’ve had to talk about with my kids a couple of occasions currently. Study for an intriguing perspective. Get Wealthy Slowly

31 Days to a Much better Grocery Spending budget — This is a series sure to assist anyone searching to conserve cash on food, but doesn’t know where to start! Money Saving Mother

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Best of Personal Finance Roundup: How I Mastered the Power Nap

Robert Wilkinson — Fri, 26 Mar 2010 18:20:03 +0000

By Linsey Knerl

Welcome to Wise Bread's Best of Personal Finance roundup. Today, we give you some killer tips for power naps, the lowdown on rechargeable batteries, and 10 uses for wine corks!

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How I Mastered the Power Nap — I LOVE power naps (provided I can do it efficiently). These tips are sure to make the experience worthwhile and headache-free! Lifehacker

Rechargeable Batteries Test — Several top-brand rechargeables were put to the test, to see which ones did the best! See the results (as well as how they were tested), in this revealing article! Tom’s Guide

10 Uses for Wine Corks — From the functional to the beautiful, these clever ways to reuse wine corks are truly inspirational! This Old House

Beef Stroganoff for $5.14 — Erin provides a delicious tutorial on preparing this meal from scratch (that’s right — no canned soups, here!) Love the bubbly sauce! $5 Dinners

Coloring Rice Green for a Springtime Display — That plastic Easter grass is messy (and not so eco-friendly). How about making a special batch of green rice to fill a basket, display, or jar? Make and Takes

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Free Cars! Cash Prizes! Just Ask Contest Pros — This article really struck me (as a former sweepstakes enthusiast), and it shows that with perseverance and patience, the hobby can really pay off for some! Wall Street Journal

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Best of Personal Finance Roundup: How to Turn Cheap "Choice" Steak into Gucci "Prime" Steak

Robert Wilkinson — Sat, 20 Feb 2010 13:20:27 +0000

By Linsey Knerl

Welcome to Wise Bread's Best of Personal Finance roundup. Today, we give you the skills to turn cheap steak into a dreamy dinner, 10 tips for making a family room top-notch, and what to do if you owe more taxes than you expected.

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How to Turn Cheap “Choice” Steak into Gucci “Prime” Steak — This technique is awesome, and likely to save some big dollars down the road! See how it’s done, and fear cheap cuts no more! Steamy Kitchen

The Room that Craigslist and Yard Sales Built — Before you write off Craigslist as a haven for junk and unworthy cast-offs, get a load of this room upgrade. Lazy Man and Money

10 Minutes to a Room You’ll Love: Family Room — Gorgeous. That’s how I describe the way our room would look if I were to follow these quick and affordable tips! Nesting Place

How I Made My Peace with Hiring a Housekeeper — You don’t have to tell me why hiring a housekeeper may be a good investment at your house. You had me at “hello.” Get Rich Slowly

I Owe More Taxes than Expected. Should I Hire an Accountant? — Unless you’re looking to go into the way-back machine and do something unethical, this may not help you in the long run. Get Tax Cat’s official stance in this article. Consumerist

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