Catholic Charities Freedom through Financial Health program

Offers a way out of predatory payday loan cycle

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414 percent.

That, according to a 2021 Missouri Division of Finance survey of payday lenders, is the average annual interest rate for a payday loan in this state.

“If your finances are in bad enough shape, it’s hard to think of anything else when you’re so worried about, ‘Am I going to be able to pay this month’s rent?’” said Kathleen Frese, a certified public accountant and financial stability specialist for Catholic Charities of Central and Northern Missouri (CCCNMO).

“That’s how they lure people in,” she said. “They don’t care if you can pay your other bills or not.”

Ms. Frese is on a mission to help people trapped in poverty by predatory lenders, through Catholic Charities’ Freedom through Financial Wellness program.

“It’s a way for you to break free from the cycle of debt and learn how to manage your finances so you never have to resort to this type of option for money to buy food or get your car fixed,” she said.

“We’ve begun to see the need for this,” Ms. Frese. “And the need is tremendous.”

The program, started in 2022, is available to Cole County residents, with plans to expand to other counties in the Jefferson City diocese.

It’s not free money. Rather, it’s a road to financial wellness for people who qualify and who agree to the terms of a new loan with much lower interest.

“You have to show that you have the monthly income to cover your basic living expenses while repaying the loan,” said Ms. Frese. “You’re going to meet with me monthly. We’ll look at your other debt, such as student loans or medical debt, and look at your credit report, and we’ll work on your budget.”

“Another requirement is, you can’t take out another high-interest loan during the term of paying this one off,” she said.

Once the application has been submitted and approved, Catholic Charities puts up the collateral for a new loan to be serviced through Mid America Bank.

The bank writes a check for the full amount owed to the payday lender and refinances the loan at a fraction of the original interest rate, likely reducing the monthly payment by hundreds of dollars.

The borrower sets up an automatic withdrawal from his or her bank account for the payments to be made each month.

Ms. Frese has a wealth of resources to help her clients set up a budget and set financial goals.

“Our goal is to help you get your financial health in order so you don’t get into the situation where you need to resort to this kind of thing again,” said Ms. Frese. “Your life can be so much better if we can help you get out of this cycle of debt and you don’t have it hanging over your head anymore.”

Breaking the cycle

A Catholic Charities donor who volunteers for River City Habitat for Humanity in Jefferson City recognized how outstanding payday or title loans were a barrier for home ownership.

“That’s what sparked the interest,” Ms. Frese noted.

The donor and representatives of CCCNMO visited Catholic Charities of Northeast Kansas to find out about that agency’s payday loan finance program.

The donor “saw what they were doing there, loved it and wanted to bring it to central and northern Missouri,” said Ms. Frese. “That’s kind of how it came to be.”

Ms. Frese previously worked in public accounting and nonprofit agencies, most recently as chief financial officer for the Jefferson City Area YMCA.

She serves on the board for Transformational Housing, which works to develop low-income rental housing for people in Jefferson City.

“Interacting with people in poverty and seeing the need — that opened up a new world for me,” she said. “It opened my heart to wanting to help people, because I feel like I’ve kind of lived in a bubble.”

At an open house she helped organize for Transformational Housing, a friend who works at Catholic Charities told her about the Freedom through Financial Wellness program and an opening for a financial stability specialist.

“It sounded like a way I could use my finance background to help people,” she said. “It seemed like a win-win for me and hopefully for Catholic Charities.”

She has witnessed the effects predatory lending has on families.

“It’s heartbreaking to see a young family whose dream is to own a home but they’ve gotten stuck in this cycle of predatory loans and they’re never going to be able to improve their credit score and save money for that down payment,” she said.

She’s convinced that many people don’t understand enough about finances to know what they’re getting into with a title or payday loan.

She recently visited a payday lending office where the annual interest rate was clearly posted at 304 percent.

“But when you’re in a desperate situation and have no other options and you need to buy food or pay rent or have an unexpected medical bill or something like that, or if you lose your job or get sick and aren’t able to go to work and don’t get paid — the reasons are endless,” she said.

Borrowers are supposed to pay off a payday loan by their next paycheck.

“But that deadline comes along and you have to pay these other bills and you can’t afford to make that payment. They’ll happily roll it over for you for more fees and more interest, and it’s a vicious cycle that just goes on and on,” she said.

“So our hope with this program is that we can find those people that are stuck in that vicious cycle and offer them hope to break out of it,” she said.

“The one driving the ship”

Ms. Frese went to Kansas City, Kansas, to shadow her counterpart at Catholic Charities of Northeast Kansas.

She was present when a client went back to the payday loan office, presented the check and started the process of regaining her financial independence.

“She had ridden a bus for over an hour — and it was a really hot day in July — to meet us,” Ms. Frese recalled. “She was so thankful and so appreciative for the help. It was wonderful. And it really gave me hope that I could facilitate that.”

On their way out, an employee of the payday lender asked for a business card, because she needed help getting out of her own payday loan situation.

“That was very powerful!” said Ms. Frese.

She noted that finances are deeply personal and that most people don’t want to open them up to someone, even if that person can help them.

“That’s why it’s essential to find out what a person values when you’re working with them,” said Ms. Frese. “They ultimately have to be the one driving the ship in order for it to be successful. I can’t tell them why they need to do this. They need to see that what they feel, what they value, matters.”

She noted that while meeting with her at the Catholic Charities Center, clients can make use of other services there, such as the food pantry or health services.

“I’ve a learned a lot about the resources that are available here and out in the community,” she said. “Just knowing what’s available can help break down barriers to getting out of poverty.”

Hope for expansion

Ms. Frese has been working with Catholic Charities’ partner agencies to explore ways to expand the Freedom through Financial Wellness program.

“We’ve had interest throughout the diocese, so we’re exploring to be able to offer it to other counties,” she said. “I’m happy to travel or talk to people on the phone.”

She has also worked to develop some educational pieces on cyclical poverty and predatory loans to use across social media in a campaign to make more people aware of this service.

She encourages people who know about the program to talk about it with people who need it.

“We have this wonderful way to help people change their lives for the better,” she said. “We want the people who need it to open their hearts and ask for the help we’re eager to give.”

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