New Payday Loan Rules

MoneyTips

Where do lower-income Americans turn when faced with immediate bills and no money with which to pay them? Most turn to the payday loan industry, which offers short-term loans in exchange for fees and high interest rates. These loans are generally $500 or less and are called “payday” loans because the borrower is expected to pay it back upon receipt of their next paycheck.

According to the Consumer Financial Protection Bureau (CFPB), the payday loan industry is taking advantage of their vulnerable customer base, trapping too many consumers in a constant cycle of renewing loans that they simply can’t pay off.

The Community Financial Services Association of America (CFSA) lists an average fee of $15 for every $100 taken out in payday loans. That cost may not sound bad – but because of the short timeline involved, it’s the equivalent of a nearly 400% annual percentage i…

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