Latest OnLine Editon  Read Here

Payday Featured

A recent article in Governing supports the elimination of payday lending, basically. It discusses how Montana capped the rate for these small-dollar loans at 36 percent in 2010. The average had been round 300 percent. Dozens of payday lenders closed in the next year. Now, 300 might seem exorbitant and 36 percent might seem like a lot to those in the auto business, but remember, these are small amounts that are supposed to be paid off in a short period of time.

People in Montana started to go online. the typical rate went to 600 percent from 300 percent. Complaints about payday loans went from one prior to the new cap to 101. But it's OK, the article tells us, because it declined into the teens. According to my math, that's still 10 times what it was before the new cap. And all a lack of complaints indicates is a lack of complaints, not a lack of problems. People could have just gotten used to the new normal. 

if there was only one complaint before, why did the state cap the rate? It was done through a ballot initiative and it's important to remember the torches-and-pitchforks mood of the general public in 2010. This was something.

The article says that when people couldn't get the payday loans, they turned to other sources, such as pawn shops and hitting up friends and relatives. I'm not sure this is better. First off, poor people tend to have friends and relatives who are, you know, also poor, so either they can't lend the money or doing so puts them in a financial bind. As for pawn shops, well, i guess some people would see those as an alternative. Not mentioned is another source of funds for the folks that used to visit payday lenders – loan sharks. And in these cases, the terms are even more punitive

Rate this item
(0 votes)
More in this category: « Life Stories Code Talk »

Ted Craig

  • Who You Gonna Call?
    Twice this week I've made calls that ended with a happy conclusion for me. I had one bill reduced and the interest taken off another. I could have just paid…
  • Can't Stop, Won't Stop
    I often joke "What happens if the CFPB solves all of the nation's consumer financial problems? What will they do then?" I don't think I really want to know the…
  • How Do You Sleep
    I didn't sleep well last night. And this morning I played a brain game on my phone and scored lower than I did the last time I played it. Sleep…
  • It's In the Cards
    Reading the latest quarterly report from Chase, I see that provision for credit losses for non-mortgage financing grew from April to June. Must be that evil auto finance bubble we…
  • Where Credit Is Due
    Why did the CFPB ban mandatory arbitration agreements? If you read their own release, it was because of credit cards. Here is what it says in the press release about…
  • Life Stories
    Harry Truman once said, "Not all readers are leaders, but all leaders are readers." But what do they read? I have noticed that more than anything, successful people read biographies.…
  • Payday
    A recent article in Governing supports the elimination of payday lending, basically. It discusses how Montana capped the rate for these small-dollar loans at 36 percent in 2010. The average…
  • Code Talk
    Here's something few men have ever said: my wife likes to watch Dr. Phil. And the other day she was watching a rerun during which Phil McGraw was pushing one…
  • All's Not Wells
    An item about the woes at Uber in the latest issue of Fortune states: "Before, Uber was 'controversial.' Now its bad behavior could serve as justification for tighter regulation." I've…
  • Worse Than Terrorism?
    A common argument I've heard in the past few years is that terrorism concerns are overblown because fewer people die in terror attacks than in car accidents. This guy makes…