The following post first appeared in a Better Life, a blog for the Courier-Journal about the aftermath of the recession. Amy Shir discusses the dangers of the debt trap caused by predatory payday lending.
Don’t be fooled by predatory grinches
by Amy Shir
Television and radio ads make payday loans sound easy and safe, but unwary consumers can pay more than a thousand dollars on a meager $250 payday loan.
They can also lose access to their bank accounts, have their wages garnished, and get caught in a deep, dark, unmerry debt trap.
Many people are feeling sad and guilty right now because they cannot afford to buy all of the presents their children would like to see under the tree. Before they do something stupid, they should imagine how much more difficult next year’s holiday season will be if their debts are unsurmountable. That is a real possibility if they make the decision to borrow money from a payday lender to pay for Christmas shopping.
TV and radio ads airing in Kentuckiana promoting payday loans fail to mention the potential for those terrible consequences. Messages such as: “Sometimes a little extra cash can really brighten up
your holiday season.” A little extra cash now may cause your lights to be turned off later.
Why would anyone take such a risk? Predatory lenders make their profits off of desperate people who fall for pitches about fast and easy money. The businesses justify their existence by saying they offer assistance
to people facing a crisis such as a medical bill or car repair. Or perceived “crises” such as paying for Willy’s Wii.
KY State law allows payday lenders to charge consumers 400% interest. Kentuckians who believe their elected leaders will protect them from financial abuses should think again. Most state legislators don’t care about anything but the campaign donations they collect from payday lending companies.
Consumers are left to take care of themselves. They can start by switching channels or turning off the TV every time a sleazy elf tries to lure them into financial ruin.