ST. LOUIS (KMOV.com) -- Another resource is open in St. Louis to help fight the pervasive problem of loan sharks. As News 4 has reported for years, predatory, high-interest loans are feeding a cycle of poverty here in the city.
“In a lot of cases, consumers are intimidated. They don’t want to go to a bank or credit union because they think they are going to be judged,” said Paul Woodruff, executive director of Prosperity Connection. “Payday lenders, while they charge a ton of money for a loan, they are accessible, they are friendly to people.”
The problem is the sky high-interest rate at most corner payday loan shops.
“The typical payday lender in the state of Missouri, with a 450% APR, that same borrower, for $300, will pay back $500 or more in interest,” said Woodruff.
Yet, many feel like they don’t have other options since few traditional banks offer small dollar loans.
“Six in 10 Americans don’t have between $500 and $1,000 in case an emergency comes up and that’s a real issue that faces people not only throughout the country but here in St. Louis,” said Woodruff.
Now, they have another option. The South City Wealth Accumulation Center opened in the Benton Park West neighborhood earlier this summer. It sits along Gravois Road.
“This is a collaboration in every sense of the word. St. Louis Community Credit Union works actively with Prosperity Connection for the Excel Center, which provides financial education, and Red Dough Money Center, alternative financial services, to help build our community. We are a solution,” said Dorothy Bell, SVP and Chief Marketing Officer with St. Louis Community Credit Union.
Bell pointed to a young woman as an example of how it works. Amethyst Brown is a student and entrepreneur.
“I think it’s lack of education to be quite honest. And I was once one of those persons who would go to your typically payday loan because I didn’t know. I just knew they were giving out money,” said Brown. “Now that I’ve gone through financial coaching and gotten more information, I now know how detrimental that is, not only to your financial stability but to your credit.”
Brown meets with a financial coach every other week at the Excel Center.
“We worked on budgeting. Budgeting. Budgeting. Budgeting,” said Brown. “From then and now I would say I’m much more confident. I’m much more educated. And I feel much more empowered as far as my financial journey is concerned,” said Brown.
As she works to pay off a loan and lower her credit card usage, she is keeping her eye on her career dreams.
“I have a lot of goals as far as my business is concerned, just to be able to get that up and running but I realized in being a business owner, you really have to have your personal in order before investing everything you have into a business,” said Brown.
While most clients are low income, leaders say they want to serve anyone who is aiming for financial stability.
“When you combine education with the tools to be able to purchase a home, purchase an automobile, that gives people real financial capability so that’s why we thought it was important to combine all three elements under one single roof,” said Woodruff.
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