WDMA Prop C

Fast (and sickening) facts about payday lenders

by | Jun 17, 2015 | Opinion

By Casey Francis

[email protected]

Center for Rural Affairs

Payday lenders target low and moderate-income people, advertizing a quick, easy loan to help make it until the next payday.

In reality, payday loans begin cycles of chronic indebtedness. According to the Center for Responsible Lending, the average borrower ends up indebted for more than six months with an average of nine payday loan transactions at annual interest rates exceeding 400%.

Twelve million Americans are trapped every year in a cycle of payday loans, with an average annual interest rate ranging from 391% to 521% for the typical two-week loan. And an average payday loan of $325 incurs $468 interest for a total repayment of $793 after the loan is flipped 8 times, which is also typical. Payday borrowers are more likely to have credit card delinquencies, unpaid medical bills, overdraft fees leading to closed checking accounts and, ultimately, bankruptcies.

This is why sixteen states and the District of Columbia have enacted double digit annual interest rate caps for payday loans.

The rates, terms, and reality of payday loans are sickening for everyone, but especially for rural residents. Small towns have a high percentage of self-employed rural people. Entrepreneurs need access to capital, so it’s important for consumers to protect their financial health. A poor credit history will limit the number of financial options open to entrepreneurs. Anything that prevents current entrepreneurs from growing or budding dreamers from opening a business harms rural communities, where entrepreneurs are a major economic force.

Established in 1973, the Center for Rural Affairs is a private, non-profit organization working to strengthen small businesses, family farms and ranches, and rural communities through action oriented programs addressing social, economic, and environmental issues.

0 Comments

Related News

What grandmothers do

What grandmothers do

By John Moore My grandmother made the best oatmeal. It was so good, it even tasted good cold. She made it each morning for my grandfather who always left some for any of his grandchildren who wanted it. I always did. There were no microwaves, so oatmeal was made on...

read more
We will reap what we sow

We will reap what we sow

By Kris Segrest When a farmer has a barren field, what does he do? He could complain about it. He could make excuses for it. He could pray about it. Yet, none of these things will help him until he plants a seed. He must get the seed in the ground to see the condition...

read more
Mow mow mow

Mow mow mow

by John Moore When I was a kid, I was the designated (fill in the blank). If the TV antenna needed turning to pick up Star Trek or Dragnet, I was the designated antenna turner. If the channel needed changing, I was the designated remote control. When the ubiquitous...

read more
What are you listening for

What are you listening for

By Ray Miranda Two guys are walking in the heart of New York City. As you can imagine they hear honking horns, the sounds of cars moving, people talking – really, just a whole at once. As one guy talks, he notices the other looks like his mind is wandering. He’s...

read more
Choose to be loved

Choose to be loved

By Lynn Burgess A verse that has been on my mind latelyis John 3:16. If you’re familiar with the bible at all, you probably know this verse… For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish...

read more
Ravages of drought not far from Texans’ minds

Ravages of drought not far from Texans’ minds

By Jeremy B. Mazur The trials of drought weave throughout the story of Texas in tales of devastation that had lasting effects on the families, businesses, and communities that survived them. These withering dry times prompted Texans to make big changes to shore up...

read more
Two guys turned 90

Two guys turned 90

This weekend I had the opportunity to celebrate two men in my life turning 90 years old.  One was my grandfather Bob Houser and the other, my friend and founding pastor Gene Getz.  These milestones gave me the opportunity to celebrate the lives of some great...

read more
Finding hope in heartache

Finding hope in heartache

I recently received a call no one ever wants to receive. My sister had been horrifically murdered at her home in South Carolina. I was stunned as I tried to process a statement that didn’t make sense to me. The next step of calling other family members to inform them...

read more
We’re global now

We’re global now

No matter how hard we try, we really can’t avoid one another. We live in a world where what takes place somewhere else on the globe has a very good chance of affecting us, along with many others. The pandemic, of course, is a useful – if sobering – example. A virus...

read more