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Payday Lending Continues to Trap Colorado Consumers in High-Cost Debt With Heavy Impact on Communities of Color, CRL Research Shows

Thursday, August 3, 2017
Delvin Davis
Ellen Harnick

Pueblo, Colo. - Today, the Center for Responsible Lending (CRL) released research showing that payday lenders continue to trap Colorado borrowers in long-term high-cost debt despite a reform bill passed in 2010. A second CRL report documents much higher concentrations of payday lending stores in African-American and Latino neighborhoods in the state. The reports are being released ahead of a community conversation this evening in Pueblo regarding economic empowerment and predatory lending. The meeting is co-hosted by the NAACP State Conference, the NAACP Pueblo Branch, and CRL.

Key findings from the two reports include the following:

  • Colorado payday customers pay an average 117% annual interest, and the average customer pays $367.29 in interest to borrow $394.77.
  • Nearly 40% of payday loans in Colorado in 2015 were back-to-back transactions where the customer pays off the original loan and immediately takes out a new loan the same day, an indicator payday lenders rely on trapping people in unaffordable debt.
  • The average Colorado borrower spends 299 days per year in payday debt by taking an average of 3.3 loans in a 12-month period.
  • Areas in Colorado that are over 50% African-American and Latino are twice as likely to have a payday store as all other areas, and 7 times more likely to have a store than predominately white areas.

While the 2010 law lowered the costs of payday loans, it did not end the practice of entrapping borrowers in longer-term debilitating debt. In fact, data from the Colorado Attorney General’s Consumer Credit Unit show a worsening in rates of re-borrowing in 2015 as compared with three years prior.

The predation occurs most heavily in communities of color in Colorado, as is consistent with other states and communities across the country. CRL research found that even higher-income communities of color have a higher likelihood of having a payday store than lower-income white neighborhoods.

“Payday lenders have a long, documented history of targeting communities of color. Past reform made the lending less pricey, but did nothing to make it less predatory. The average borrower is trapped for nearly a year and pays in fees nearly as much as she borrows.” said Delvin Davis, CRL Senior Researcher and author of the report documenting racial impacts.

“It is clear that the reform passed in 2010, while helpful, has not adequately resolved the problem of the payday lending debt trap in Colorado. The data show that triple-digit interest rates and long-term indebtedness are still the norm for families who are drawn into this type of transaction," said Ellen Harnick, CRL's Western regional office director.

“These loans are harmful. We have members who have been forced into bankruptcy as a direct result of payday lending,” said Rosemary Lytle, NAACP State Conference President. “Now we know that in Colorado, as in other places across the country, payday lenders continue to impede economic empowerment in communities of color.”

Prior CRL research found higher concentrations of payday lending stores in communities of color in North Carolina, California and Florida.

"Colorado is home to over 400,000 veterans, and though the Department of Defense and Congress have taken steps to protect active-duty military through a 36% interest rate cap, these veterans and their families remain unprotected and at risk," said Leanne Wheeler, an Air Force veteran, and 2nd Vice President of the United Veterans Committee of Colorado. "Fixing this problem is a priority so that those who have served our country, many of whom struggle to secure their financial futures, cannot be set back by the deceptive traps of predatory lenders." The committee represents multiple veterans organizations on public policy issues.

Colorado has the ability to save its residents $54 million annually and join 15 states plus the District of Colombia by reducing the cost of payday loans to 36% annual interest. A rate cap such as this has been proven to be the most effective way to stop the harms of the payday lending debt trap. The Consumer Financial Protection Bureau, which is prohibited from setting a cap on the cost of loans, is currently considering federal protections which require payday, car title, and high cost-installment loans aimed at ensuring borrowers can repay loans without re-borrowing or defaulting on other expenses.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Carol Hammerstein at or 919-313-8502.