Payday Lending: Consumers Turning to Short Term Loans
Members of the Senate are pushing a bill to toughen up on the payday lending industry. Collectively, consumers in the U-S rack up about two trillion dollars of credit card debt each year. In a bind payday lending might sound like a good idea.
“It’s quick money and they don’t run a credit report to see how far out you’re already over-extended,” says Michaele Pena, Director of Consumer Credit Counseling at Family Services, Inc.
For that reason, Pena cautions against the short term loans.
“Taking money from people you know you can’t pay back is just digging the hole deeper,” she says.
With no choice other than to take out another cash advance customers face hefty fees.
“It sounds like a small amount of money that they’re charging you. To get a hundred dollars is typically around fifteen dollars,” says Pena.
It’s a compounded interest rate of more than 3-hundred percent.
“You gotta be honest with yourself,” says Pena.
Credit counselors say the number one culprit sending consumers to payday lenders is the same one pushing Americans into credit card debt… living beyond their means.
The Senate wrapped up Wednesday’s debate on payday lending legislation without a decision. They are considering legislation that would require consumers to take a two day break between loans; those loans would be limited to $500.
Free Consumer Credit Counseling is available at Family Services, Inc. To sign up, give them a call at 843.744.1348 or visit them online atwww.fsisc.org.
July 11th, 2011 at 5:44 pm
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