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Baltimore’s Cash Advance Alternative

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Darrell Witherspoon stands with his wife Velma and his grandchildren in front of the house he was able to rent in part with the help of a loan through the "Borrow and Save" program administered by Neighborhood Housing Services of Baltimore.
Cathy Duchamp
Darrell Witherspoon stands with his wife Velma and his grandchildren in front of the house he was able to rent in part with the help of a loan through the "Borrow and Save" program administered by Neighborhood Housing Services of Baltimore.

By Cathy Duchamp

Community organizers in Baltimore are using a carrot and stick approach to wean people off cash advance loans.

The carrot: a $1,000 loan at eight percent interest. The stick: you have to go to financial fitness class to get the money.

Darrell Witherspoon jumped at the offer.

"I grabbed the number as soon as I seen it. I said ‘I can’t believe this is happening.' This is what I want, way better than the alternative was," says Witherspoon.

The alternative was a cash advance loan with a double-digit interest rate. Witherspoon says he did that before and it took about three years to get clear of all the repayments. The “Borrow and Save” program is sponsored by banks, the FDIC and managed by Neighborhood Housing Services of Baltimore.

Witherspoon used his loan to pay some bills and move to a safer neighborhood with his wife and grand-kids. But he says the financial counseling was more valuable than the cash. One lesson: pay yourself first.

"So now I snatch $40 out of my pay no matter what going to a savings account just to make sure I got a little extra that I don’t need or don’t touch. That’s a plus for me," he says.

About 100 East Baltimore residents now have loans through Borrow and Save.

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