Newsletter

Payday loans can cost more in fees than original amount

Hellmich, Nanci

2014

Overview

\"We are concerned that too many borrowers slide into the debt traps that payday loans can become,\" bureau director Richard Cordray said in a statement. \"As we work to bring needed reforms to the payday market, we want to ensure consumers have access to small-dollar loans that help them get ahead, not push them farther behind.\" Here's how the loans work: Say you need money today, but payday is a week or two away. You write a check dated for your payday and give it to the lender. You get your money, minus the interest fee. In two weeks, the lender cashes your check or charges you more interest to extend, or \"roll over,\" the loan for another two weeks. [Gary Schatsky] suggests that people who are desperate for money should wait on purchases until their next paycheck, get a loan from a friend or even borrow on their credit card. \"The sad reality is, as bad as it is, even borrowing on a credit card is probably better than getting a payday loan. It will probably end up being cheaper than what a payday loan charges.\"

• Publisher: USA Today, a division of Gannett Satellite Information Network, Inc
• Subject: Hellmich, Nanci