States Set Collision Course Over Pay-on-Demand for Earned Wages
“Frankly the direct-to-consumer model is just a garden variety payday loan,” said Andrew Kushner, senior policy counsel at the Center for Responsible Lending.
Payday lenders charge exorbitant fees to borrowers without assessing their ability to repay, and the annual interest rates on these loans are in the triple digits.
On March 26, the Consumer Financial Protection Bureau offered a first look at proposals under consideration to curb the payday loan debt trap. The consumer agency released information outlining their deliberations at a field hearing in Richmond, VA – at which the agency also heard from a panel of consumer and civil rights advocates, as well as payday industry representatives...
Payday and car-title loans typically carry annual percentage rates (APR) of at least 300%. These high-cost loans are marketed as quick solutions to a financial emergency. Research demonstrates, however, that they frequently lead to debt that is nearly impossible to escape. In addition, these loans are related to a cascade of other financial consequences, such as increased overdraft fees, delinquency...
This color-coded map of payday stores by household reveals a disturbing pattern. Southern states are among the most targeted for these high-cost, low-dollar loans.