By Chuck Bentley
A bright orange ATM is popping up around Moscow, Russia at railway stations and shopping malls. This strange kind of ATM looks like a regular cash machine, but it’s designed to accept loan applications and dole out money on the spot.
The loan ATM is a product of Oleg Boyko, a Russian billionaire who made his fortune running slot machine halls. He now has about 20 automated loan machines installed throughout Moscow. They allow customers to request as much as $241 that must be paid back in 20 days or less.
The interest rate is 2 percent a day, which works out to 730 percent on an annualized basis. That may seem insane, but some Russians have been willing to embrace the technology to make ends meet between paychecks. For many Russians, it’s the only way to borrow. It is hard to imagine that people are willing to pay 2 percent per day interest, but so far it seems to be working.
Essentially it is a payday loan available via your ATM.
Want to know how to avoid ever borrowing money at such a ridiculous rate? Save $1000, put it in an emergency savings account, and you have your own money to fall back on during a shortfall. Imagine paying yourself back at these rates for one year. If you borrowed $1000 from your account and paid back 2 percent per day for the entire year, you would have $7300 in your account. Better your account than a Russian billionaire’s.
With bank deposits earning almost zero on your savings, it would be a shame to borrow money at such an outrageous cost. But apparently it is working, for now.
Originally posted 3/12/2015.
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