Activists in Daly City, Calif., are calling for a ban preventing any more payday lending businesses from setting up shop in the city. The Youth Leadership Institute reports that Daly City already has five such businesses, more than any other city in San Mateo County.
Fahad Qurashi, senior director of the group, says the average annual interest rate on a payday loan is 459 percent, and that Daly City residents forked over $275,000 in payday loan fees in 2012. The Youth Leadership Institute is working with local teens whose families have suffered due to taking out payday loans. One teen says payday loan debt was a factor in his family losing their residence and moving to stay with relatives in Sacramento.
Although it is illegal to issue payday loans to repay earlier ones, Youth Leadership Institute Program Coordinator Gabriel Dela Cruz says this can be done if the businesses are numerous enough and close enough in proximity, allowing consumers to move debts from one store to another. Cruz also points out that payday lending businesses are eight times as likely to be located in neighborhoods with high concentrations of minorities.