Pa. Should Keep Cap on Payday Lending
June 28, 2012
Despite the fact that it would subject Pennsylvania borrowers of payday loans to interest rates as high as 369 percent on an annualized basis, a bill sponsored by state Rep. Chris Ross (R-Chester) has managed to win support in the House. Currently, Pennsylvania limits interest on short-term loans at no more than 24 percent; and it bans Internet lending altogether. Ross' proposal, however, would eliminate that cap and invite Web lenders into the state. Contrary to his proclaimed desire to protect the consumer, an editorial in the Philadelphia Inquirer asserts that the legislation will only benefit predators. The writers note that the high interest rates and fees that accompany payday loans often trap low-income consumers in a nasty spiral of debt that is difficult to escape. The Ross bill now heads to the state's upper chamber, where Sen. Anthony Williams has vowed to expose the measure's true intent. He has penned amendments to the legislation that he hopes will make it less appealing to lenders, including inserting language that blocks them from securing loans with borrowers' bank accounts. "But compromise isn't the answer," the Inquirer concludes. "Pennsylvania already has good payday-loan protections that should be honored."
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