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What do you all think of this?
I get a bad feeling that desperate people will fall for it and find themself in a deep hole if they are not careful .
I think anyone who is cash strapped for food should check out a food bank or church before signing up for something like this.
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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.
I get a bad feeling that desperate people will fall for it and find themself in a deep hole if they are not careful .
I think anyone who is cash strapped for food should check out a food bank or church before signing up for something like this.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.
--------------------------------------------------------------------------------
Staff writers Megan Ward and Binyamin Appelbaum and staff researcher Marion Paynter contributed.