Payday Loan Sharks and the High Cost of Being Poor
A recent article in The Economist highlights the high cost of being poor in America. From fees to cash checks to getting paid on prepaid debit cards that carry costly fees and yes, to accessing credit by way of high-priced predatory lending loan sharks.
The article notes:
To access credit, the poor typically rely on high-cost payday lenders. In 2013 the median such loan was $350, lasted two weeks and carried a charge of $15 per $100 borrowed—an interest rate of 322% (a typical credit card charges 15%). Nearly half those who borrowed using payday loans did so more than ten times in 2013, with the median borrower paying $458 in fees. In 2014 nearly half of American households said they could not cover an unexpected $400 expense without borrowing or selling something; 2% said this would cause them to resort to payday lending.
Tennessee Citizen Action is taking the lead in Tennessee on combating the predatory practices of payday lenders. We’ve been tracking efforts to rein-in payday lending by way of the Loan Shark Ledger and we’re taking steps to hold predatory payday lenders accountable.
It’s time our state took steps to protect those who are forced into a debt trap because of an unexpected expense.
We’re going to keep telling this story — and, we’ll soon be proposing concrete steps to help address predatory practices.
If you find a story on payday lending you’d like us to share, send it to firstname.lastname@example.org
And remember, we count on your support to win the fight against payday lending loan sharks in Tennessee. Your contribution of $5 or $10 today will help keep the Loan Shark Ledger coming and keep the fight against legalized loan sharking alive.
Keep up with payday lending and other important consumer rights issues by following us @TNCitizenAction