Predatory payday lending practices cost American families $4.2 billion annually.
Payday lending (sometimes called cash advance) is the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan. To qualify, borrowers need only personal identification, a checking account, and an income from a job or government benefits, like Social Security or disability payments.
Research shows that the payday lending business model is designed to keep borrowers in debt, not to provide one-time assistance during a time of financial need. According to CRL's research, borrowers who receive five or more loans a year account for 90 percent of the lenders’ business. Our report, Financial Quicksand, shows that payday lenders cost American families $4.2 billion every year in predatory fees. Twelve states and the District of Columbia will save a collective $1.5 billion per year with an effective solution -- a cap on interest rates for consumer loans in the 36-percent range.
To learn more about predatory payday lending, explore our starter toolkit.
Briefs & Factsheets
CRL Critique of “Payday Holiday: How Households Fare After Payday Credit Bans”
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Reports & Papers
Financial Quicksand
Across the nation, payday borrowers are paying more in interest, at annual rates of 400 percent, than the amount of the loan they originally borrowed. More >
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Policy Recommendations
36% Cap Springs the Trap
Report confirms that measures short of an interest rate cap fail to slow the cycle of debt that catches borrowers in repeat payday loans. More >
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HIGHLIGHTS
Payday loans scrutinized
VIDEO: With more American's struggling financially, payday loans are coming under scrutiny for trapping the working poor in a vicious cycle of debt.
Payday loans are not missed
The North Carolina Commissioner of Banks finds working families are better off without payday lending. |
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