THE RIBBON cutting for the Woonsocket micro-branch of the Capital Good Fund, a new alternative to payday lending, was held Nov. 4. Among more than 50 who attended were U.S. Sen. Jack Reed, Rhode Island General Treasurer Gina Raimondo, Rep. Frank Ferri, D-Warwick, and other local officials, as well as representatives of the sponsoring organizations, the United Way of Rhode Island and the Capital Good Fund.
WOONSOCKET – In an effort to reduce the use of payday lending that often draws financially fragile families into a worsening debt cycle and, in the long-term, to have a positive impact on the state’s economy, the United Way of Rhode Island awarded a $56,950 grant to help launch an innovative financial counseling and loan center in Woonsocket.
“This initiative is part of United Way’s focus on income, where we work to help lower-income, working Rhode Islanders earn more money and to keep more of it,” said Anthony Maione, president and CEO of United Way of Rhode Island, at the Nov. 4 ribbon cutting for the center.
“It aligns perfectly with our efforts around job training and access to the Earned Income Tax Credit,” said Maione. “This program will not only help our neighbors meet their immediate needs, it will also save them money in the long-term.”
The initiative, called “Cash Now, Savings Later: An Alternative to Payday Lending,” is in collaboration with the nonprofit Capital Good Fund, a certified Community Development Financial Institution that uses financial services to combat poverty.
“At a time when Rhode Islanders continue to feel the effects of the financial collapse and the Great Recession, it is imperative that they be given access to affordable, equitable financial services, as well as high-quality financial coaching and counseling, “said Capital Good Fund Co-founder and Executive Director Andy Posner. “We are thrilled to partner with United Way of Rhode Island and local community organizations to offer families a loan product that meets their needs and empowers them to succeed.”
Payday, or cash advance, lenders market their loans as a short-term solution to an emergency need, such as repairing a broken car or damaged water heater. However, the loans often turn into long-term debt traps. Between 2008 and 2011, coinciding with the economic downturn, the volume of payday lending in Rhode Island doubled, reaching $70 million in 2011.
“It’s unfair for hardworking families and individuals in Rhode Island to be faced with rates of 260 percent on payday loans. I speak with people all the time who get stuck in these cycles of debt,” said Rep. Frank Ferri, D-Warwick. “As we continue to push at the Statehouse for a 36 percent cap on interest rates, I’m thrilled to see an initiative like this come to fruition because Rhode Islanders deserve fair lending practices and financial options.”