Groceries on credit?

I am never surprised anymore what lenghts predators will go to try and wring every last dollar out of those who can least afford it!
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Bi-Lo's grocery credit card stirs concern
NICHOLE MONROE BELL
nbell@charlotteobserver.com
Need groceries but can't pay right now?

Bi-Lo is rolling out a new store credit card that lets customers with a checking account and photo identification buy now and pay later -- but advocates for the poor worry the program is too similar to high-interest predatory loans.

Officials with the Mauldin, S.C.-based supermarket chain say BonusPay, introduced in all South Carolina Bi-Lo stores last week, is a way to help cash-strapped shoppers avoid fees associated with revolving credit or bounced checks.

With BonusPay, shoppers are given a credit line of $50 to $200 and are charged $3 or $5 each time they use the card at the checkout, plus $4.99 for each month they use the card. The balance and fees are deducted from their checking account when they get their paychecks. A credit check is not required, nor is proof of income. In comparison, fees for bounced checks range from $30 to $70, depending on the financial institution.

"Paying a fee like this is a whole lot cheaper than bouncing a check," said Avery Price, store manager for the Bi-Lo on Cherry Road in Rock Hill. He said the grocery store giant plans to introduce the program to N.C. stores in a few weeks.

Price said his store set up tables over the weekend to let customers sign up for the program. They can register from home or use the store's courtesy phone for instant approval. Price said he thought the fees were "very reasonable" for people on a tight budget.

"When you weigh it against having to carry a balance on a credit card or writing a check and having it returned, it's a lot less costly," he said.

Bi-Lo spokeswoman Joyce Smart said the company hopes to develop customer loyalty with the program. She said she thinks Bi-Lo is the only grocery store chain to offer the short-term loans.

But advocates for the poor said the program is too costly to shoppers, especially those who have trouble making ends meet. They said BonusPay works like payday loans, which a growing number of states, including North Carolina, have cracked down on because they can trap people in a financial hole that's tough to escape.

With payday lending, customers borrow money they must pay back after their next paycheck, plus a hefty fee. While North Carolina effectively banned payday lenders by capping interest rates on short-term loans, the businesses continue to thrive in South Carolina.

Bi-Lo said BonusPay is nothing like payday lending; the chain says it is providing a service that benefits people who may not have another way to pay for food.

But the costs add up. A person who makes one $25 purchase in a month would pay $32.99; a $50 purchase could end up costing $59.99. In some cases, the money would have to be paid back in as little as seven days. And if shoppers don't have enough money to repay the entire balance, they would be charged a bounced-check fee.

The fees for the BonusPay card do not go to Bi-Lo. They go to Purpose Solutions and the First Bank of Delaware, which run the program. Officials with the companies did not return repeated calls seeking comment Monday. Purpose Solutions is a subsidiary of Atlanta-based CompuCredit Corp., which offers a variety of financial products to borrowers with poor credit.

"This is potentially moving the payday-loan transaction from the payday-lending shop to the grocery store," said Al Ripley, of the N.C. Justice Center in Raleigh. "This is very expensive credit. Our concern would be that if people are desperate for food, you run the risk of taking advantage of folks."

Bi-Lo is competing in a fiercer market since the entry of Wal-Mart, which has captured a growing share of low-income shoppers to become the nation's largest grocer. Bi-Lo has been particularly vulnerable because the company has relied heavily on lower-income customers -- the very consumers who might find a credit program appealing, said Britt Beemer, chairman and founder of Charleston-based America's Research Group.

"Bi-Lo has ... always chased a lower-priced strategy, which has put them right in the jaws of Wal-Mart," Beemer said. "This is a unique service to try to distinguish themselves."

Several customers interviewed at a Rock Hill Bi-Lo said they were unaware of the BonusPay program. Rock Hill resident Linn Craycraft said she was wary of the card because she is on a fixed income and her expenses vary too much.

"It makes it too easy to get in deep," she said. "You see a couple of T-bones and start racking up charges."

About Bi-Lo

Bi-Lo is a privately held company based in Mauldin, S.C., that operates more than 300 supermarkets in the Carolinas, Georgia, Tennessee, Alabama and Florida.


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Staff writers Megan Ward and Binyamin Appelbaum and staff researcher Marion Paynter contributed.


Recent Comments

It sounds like Bi Lo is out to make money. What are they doing?...
It sounds like Bi Lo is out to make money. What are they doing?...
It sounds like Bi Lo is out to make money. What are they doing?...
It's pitiful that there will be some people who will fall for this...
When short on money at the end of the month, I find great comfort...
»Read More
Post Your Comment

[pearlieq]

Oh my gosh! Those fees are outrageous!

[autoxer]

Price said he thought the fees were "very reasonable" for people on a tight budget.

"When you weigh it against having to carry a balance on a credit card or writing a check and having it returned, it's a lot less costly," he said.

What a scam.

But the costs add up. A person who makes one $25 purchase in a month would pay $32.99; a $50 purchase could end up costing $59.99. In some cases, the money would have to be paid back in as little as seven days. And if shoppers don't have enough money to repay the entire balance, they would be charged a bounced-check fee.

Let me see, paying 32.99 to borrow 25 is almost 32% interest. And you have a week to pay it back. For a credit card to accrue that much interest on a $25 balance in only 7 days, it would need an APR of 1,666%.

"Paying a fee like this is a whole lot cheaper than bouncing a check," said Avery Price, store manager for the Bi-Lo on Cherry Road in Rock Hill. He said the grocery store giant plans to introduce the program to N.C. stores in a few weeks.

They're scam artists, pretending like they are doing you a favor.

[funnyvalentine]

that is truly hideous. I'd boycott Bi-lo and alert the local media. What a bunch of crooks.

[boefixepa]

Why?....WHY do people think the only way out of their 'tight' money situation is to use credit!!! CREDIT is NOT the answer and this a very predatory method to try and retain customers!

[funnyvalentine]

credit is appropriate for long term, large purposes, not for everyday expenses.

[Ima saver]

That is terrible, I would never buy food on credit. I won't boycott Bi Lo, but I think anyone who uses this, is not using good sense!

[sweeps]

While this situation is a scam, putting groceries on credit card is a good deal if you pay it off every month and get 5% cash back* for the privilege.

* Unfortunately the 5% cash back cards are disappearing.

[Ima saver]

Well, that is true, sweeps. I just have always had a "thing" about charging food and dinner out!

[getforfree]

These people just using poor customers to make extra money. Those customers don't use their head, when they agree to those fees. Ok, if you don't have any money, don't buy it, in most cases some items can wait an extra week and you can eat out of your pantry, and maybe spend like only $10 instead of $50 for that week.

I put everything I buy on my cashback credit card and make a few extra $$ every month.

[greedy4chips]

The poor people are the only ones who are going to use this program, since everyone else has the money or has a credit card to charge it to.

Poor people get so much from the govt that they do not deserve! Let them use the card I say! Educate them by showing them the cost of not waiting to buy groceries. Teach them to budget.

Better yet, get a better job and earn more money.

People use calling cards and pay ridiculous rates when using a pay phone. People rent pay per view movies and pay a ridiculous convenience fee to do so. People borrow money on a CC and pay ridiculous fees. People pay ATM fees at the rate of 40% interest per year (Avg $100 withdrawal every 2 wks at $1.50 per withdrawal).

If you provide a service you deserve to make money for it. If the service you provide is not needed or cost prohibitive, it will not succeed.

[boefixepa]

Yeah, true greedy4chips, if people are dumb enough to do it, more power to them. It's really a matter of education. The sad part is most poeple don't care enough to learn.

[asmom]

Originally Posted by greedy4chips

Poor people get so much from the govt that they do not deserve! Let them use the card I say! Educate them by showing them the cost of not waiting to buy groceries. Teach them to budget.

Better yet, get a better job and earn more money.

May I ask, how old are you? You seem to have a very immature view of the poor. If it was as simple as just getting a better job and earning more money, then why do you think poor people don't do it? Do you think there is a large contingent of people who enjoy pushing mops and picking up garbage? And I got news for you, poor people are the best budgeters in the nation. What choice do they have except to learn how to make a dollar stretch and pay the rent and eat.

[greedy4chips]

Originally Posted by asmom

May I ask, how old are you? You seem to have a very immature view of the poor.

I am 38 yrs old. My view of the poor is from watching all the poor people around me in my life suck the life out of the system the government has in place and anyone who has the compassion to help them out.

I am not talking about people who are mentally challenged or have a disability. I am talking about those people in society that think the system owes them something. I am talking about those people who somehow have money to do things like smoke, drink, gamble, or any nonessential expense when they choose not to work another job or a better paying job.

Obviously throwing a blanket over all poor people is wrong on my part. How are they the best budgetors in the country? They have debt too. My neighbors growing up had more junk cars in their yard because they couldn't afford to fix them...not one that I know of was ever paid for with cash.

I am sorry if that is immature of me, but I have formed this opinion by watching those less fortunate around me. Of all the poor people I ever knew, not 1 works more than 40 hrs/ wk.

OMG this is America and people risk their lives to get here to make a better life for themselves. It just burns me when people give the poor some sort of excuse card and ask the government to give them more of what they didn't earn!

[mschluckbier]

Warning: personal experience ahead:

I will be the first to say that there are way too many people who abuse the system in this country...BUT....

to blanket all people who are poor is wrong. And there are quite a few people who do work more than 40 hours a week and still can't make ends meet.

For 4 years I was a single mom of 3 young children. For most of that I worked as many hours as I could at whatever job I could find, always looking for something better. I made mistakes when i was younger, I quit college to get married, had kids, then ended up divorced with nothing but my brain and hands. While my exhusband went and bought himself a brand new truck, I STILL drive my 10 year old car I paid off, because it works, and I don't have the money to get a newer one. For the last year, I went to school more than full time, taking 16+ credit hours each semester, plus worked at least 50 hours a week so that I could stay OFF assistance. And what did that mean?

It meant my bills were paid, generally on time, but when I had to replace the transmission in my car so I could GET to school and work, I almost got my utilities shut off. I was budgeted to the bone, there wasnt a penny spent that wasnt budgeted for. I had a cell phone, bu my parents paid for it so that I would have ANY phone, I had internet, but it was a necessity for school work and research. No cable, no eating out, no nothing. If I went out, it was because I was asked by someone on a date, where they paid. When I met my fiancee, we went out for our first date, and after that, we mostly stayed in and watched movies, popped popcorn, or played games with the kids.

There are PLENTY of hardworking poor people out there, who can't always get a leg up, no matter how hard they try. Just like there are PLENTY of lazy jerks who don't bother to try.

[asmom]

Originally Posted by greedy4chips

Obviously throwing a blanket over all poor people is wrong on my part.

Yes it was. Surely you must realize that your experience is not the sum total of the way of life for the poor. Far, far more poor people do not get government assistance than do. So while you may know some poor people with bad budgeting skills who take advantage of the system, there are many more who work and work and who do not. And to sflippantly ay, just get a better paying job is just silly. If it was that simple to just trade up to a better paying job, wouldn't we all?

[greedy4chips]

Originally Posted by mschluckbier

For 4 years I was a single mom of 3 young children. For most of that I worked as many hours as I could at whatever job I could find, always looking for something better. I made mistakes when i was younger, I quit college to get married, had kids, then ended up divorced with nothing but my brain and hands. While my exhusband went and bought himself a brand new truck, I STILL drive my 10 year old car I paid off, because it works, and I don't have the money to get a newer one. For the last year, I went to school more than full time, taking 16+ credit hours each semester, plus worked at least 50 hours a week so that I could stay OFF assistance. And what did that mean?

Now this is someone I would give assistance to. I would babysit your kids for free! You sacrificed and did what it takes to make a better life for yourself and your kids. I am proud of people like you!!!!

Originally Posted by asmom

Yes it was. Surely you must realize that your experience is not the sum total of the way of life for the poor. Far, far more poor people do not get government assistance than do.

First of all what do we consider poor? 20k per year, 15k per year, or 50k per year? For me it is 20k or less per year. That's $10 per hr for 40 hrs per wk.

Originally Posted by asmom

So while you may know some poor people with bad budgeting skills who take advantage of the system, there are many more who work and work and who do not. And to sflippantly ay, just get a better paying job is just silly. If it was that simple to just trade up to a better paying job, wouldn't we all?

If you can't make enough then you need to work more hours or find a new job. The grocery stores pay $10/hr to stock shelves. My wife made $14+ per hr (tips included) delivering pizza after gas expense. I can tutor for $12/hr. Money is there to be made if you look around and don't discount a job because you think it is beneath you.

I think a lot of the poor people I know are happy enough that they do not have the initiative to get a better education or to work harder. Would I ever work construction again? Heck no, too hard. Would I work 80 hrs/wk? No way!

Last time I looked, trucking companies will pay you to learn to drive to eventually work for them. Most of those companies pay 35k+ to start around here.

This is the land of opportunity afterall!

[jacquelynrose]

I am sorry but I have to agree with Greedy on this one....Honestly, there is no such thing as a poor person...I mean, what exactly is the definition of a poor person anyway? I was 'poor' growing up, but I still had food and a place to live. I lived in a Motel growing up, on a poor street called Fremont in Vegas...then when I moved to Utah I was a teen so my initial jobs were not good but they got better, my parents jobs got better, my living arrangement got better....I know this may not sound kind but I do not have sympathy for poor people because really they got there SOMEHOW. You cannot blame your Envoirment nor the System....

There are people out there who take advantage of it. I believe everyone here has discussed the supposedly 'poor' beggar making tons of money begging on the streets. If there is a will, then there is always a way.

I lived in Mexico for two years. We worked, I had a roof over my head and some days we had no money and made homemade flour tortillas to eat. Is that poor? What is poor? I have no idea, I really do not believe in the meaning of poor.

DEFINITION according to Dictionary.com

poor  /pʊr/ Pronunciation Key - Show Spelled Pronunciation[poor] Pronunciation Key - Show IPA Pronunciation adjective, -er, -est, noun
–adjective
1. having little or no money, goods, or other means of support: a poor family living on welfare.

THAT Is POOR? I think that is lazy. There are so many Resources available to make money or get help.

Please no tomatoes

Jacquelyn

[greedy4chips]

Jacquelyn,

Thanks for your support! We may be on an island by ourselves on this one though!

[mverch]

There was a time early in my marriage when we had to buy groceries on credit. I was grateful for that. Those Fox DeLuxe Frozen Pizza's ($.69) kept us alive.