Payday loans cost U.S. families an estimated $3.4 billion in fees annually, according to the Center for Responsible Lending.

With more states aware of the problem, many are doing away with predatory payday lending or restricting the number of loans a borrower can withdraw in a year. States that do not permit payday loans include Connecticut, Georgia, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Vermont and West Virginia.

Consumers who choose short-term credit need to learn more about the lender they are borrowing from, said Amy Cantu, communications director with the Community Financial Services Association of America. She advised that many lenders and lending models exist in the short-term credit space, but the trick for consumers is to separate the legitimate firms from those committing fraud and other scams.   

Traditional alternatives to payday storefronts include banks and credit unions.

"We've found that credit unions and banks have very little financial incentive to offer this product because there's a high risk of default and a high cost associated with providing short term credit," Cantu said.
Members of Community Financial Services Association of America that engage in best practices include payday loan franchises such as Money Tree and Advance America, according to Cantu.

FinFit loans is one alternative to storefront payday loans and are offered as part of an employee financial wellness program.

Before borrowing, workers complete a financial assessment, but FinFit loans are limited to employees whose employer is enrolled in the FinFit program because payments are payroll deducted over five months.

Despite innovative alternatives, such as FinFit loans, there always will be a contingency that opt for payday storefront loans.

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