Major Tech Companies Offering Payday Loan Alternative to Employees
Inside Subprime: May 9, 2019
By Lindsay Frankel
An increasing number of technology companies are announcing new benefit to help employees avoid payday loans and other expensive methods of borrowing. Recent examples allow employees to borrow up to 20% of their paychecks at interest rates under 5 percent.
When compared to payday loans, which carry average annual interest rates of almost 400 percent, the employee loan product is a much safer alternative for cash-strapped workers. The benefit has the potential to increase retention for workers who might otherwise seek higher wages at other companies.
An astounding 78 percent of workers are living paycheck to paycheck, and costly methods of borrowing only exacerbate that financial insecurity. While employee loan programs may not go as far as wage increases in terms of protecting workers from financial hardship, it is important for employers to offer an array of financial benefits.
As one CEO wrote in BizJournals, “Corporations need to be more empathetic to the financial decisions that many of their employees have to make on a daily basis. Recognizing the importance of financially-healthy employees is critical, as is providing benefits that assist those employees to improve their financial situation.”