Payday lending is a service usually provided by private for-profits that charges a hefty fee on top of lending cash in advance of payday (and effectively using the paycheck as collateral). Payday lending has traditionally been viewed as taking advantage of people's less than steller financial situations.
A Washington Post article notes that some credit unions, non-profits focused on helping particularly low-wealth individuals save and borrow affordably, have been getting into the payday lending game charging some fairly high interest rates. Such lending has proven lucrative for credit unions, and as advocates would argue, ensures that the service is available to those in need, at less than usury rates, and allows the credit unions to tap an additional source of revenue in support of other services. Others would argue that this makes credit unions no better than the payday lenders common in low-wealth neighborhoods.
What do you think? Good mission-centered practice by the credit union board or evil practice that contributes to not positively differentiating the benefits and role of credit unions from those "evil" payday lenders?
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