CRL in the News

It’s become more expensive to carry debt in recent months since the Federal Reserve has been raising interest rates to try to get inflation under control. That may be contributing to the increase in credit card balances in a couple of ways, according to David Silberman at the Center for Responsible Lending. “As interest rates go up, the amount of any payment that goes to interest rather than to repaying the principal goes up,” he said.

A dozen advocacy groups, led by the Center for Responsible Lending, wrote to the Office of the Comptroller of the Currency and the Federal Reserve Bank of Philadelphia in August, urging them to curb the deal over the amount TD collects in overdraft fees.

The Prison Policy Initiative, a criminal justice policy think tank, and the National Consumer Law Center, along with 27 other organizations, including the Center for Responsible Lending, and Southern Poverty Law Center, signed the letter. It explained that incarcerated people are often hit with fees for phone calls and messaging services, electronic monitoring and post-arrest diversion programs.

“Saying that people who are in hard financial straits need access to this kind of credit is sort of like giving a starving person rotten food,” Whitney Barkley-Denney, senior policy counsel at the Center for Responsible Lending, told The Intercept. “It makes them sicker than they were in the first place. People who borrow with payday loans find themselves facing bankruptcy, foreclosure, and worse. So the solution to the problems so many people face is higher wages and better jobs, instead of loans that sink them further and further into financial insecurity.”

“Student loan debt is both a product of the racial wealth gap and a tool that exacerbates racial inequality,” said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending.

At least three federal agencies have also taken action over the past two years to reduce junk fees and increase transparency. That includes the Consumer Financial Protection Bureau, which has ramped up its oversight of surprise overdraft and depositor fees charged by banks. The Center for Responsible Lending has hailed the move as "a big step" in highlighting the harms of charges that "wreak havoc on household budgets".

“Despite recent progress in addressing overdraft fees, the job is far from complete. The Consumer Financial Protection Bureau took a big step by banning surprise overdraft fees,” Nadine Chabrier, the Center for Responsible Lending’s senior policy counsel, said in a statement. “We are encouraged that the consumer bureau announced it will take additional steps, and we urge the bureau to place strong limits on the size and frequency of these fees.”

Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending, said borrowers need to stay in constant contact with their loan servicer, which may have changed. "During the beginning of 2022, federal student aid took on new contracts for servicers," Herbin pointed out. "It used to be Navient and Sallie Mae. So you should have been receiving those emails. Some of them may have come from Aid Advantage who took on the Navient contract. Mohela as well."

The Center for Responsible Lending released a report this year that showed economic gaps and underfunding at HBCU’s push students to take on a disproportionate amount of debt. This keeps graduates from adding to their net worth later in life, the report said.

Repaying buy now, pay later purchases with credit cards isn’t any better, even though some do it. “This practice — essentially using a credit card to pay off other debt — is a sign of inability to repay,” according to the Center for Responsible Lending and other groups in a March 2022 joint report.