In Alabama, city councilors in Anniston are considering a six-month block on new payday lenders in the city limits. This would give municipal leaders time to develop a more permanent strategy for limiting the lenders' growth. Consumer advocacy groups say this would curb excessive debt for the needy and improve economic development, but payday supporters counter that moratoriums limit many residents' ability to obtain loans.
City manager Brian Johnson requested the moratorium to address the local concentration of payday lenders. Records show that there are about 25 payday loan businesses in Anniston. Johnson plans to meet with the city attorney to determine ways to limit future payday lending growth. Current lenders operating in the city will not be impacted.
In Alabama, payday lenders can charge 400 percent annual interest rates on their loans. This amounts to about $17.50 per $100 borrowed. Under state law, loan amounts are limited to $500 per customer.
Alabama Appleseed's Shay Farley says a moratorium, if approved, would make Anniston the 18th jurisdiction in the state to create such a payday lender barrier. "That sends a major message that local municipalities are being impacted by lenders," Farley said. The organization is supporting new state legislation to limit payday lending loan interest to 36 percent.