Published: March 2013

Payday loans are dangerous for consumers

Banks pitch payday loans as short-term borrowing that allows their customers to deal with a financial emergency, repay the loan, and move on. In fact, CRL's research shows that their triple-digit interest rate loans trap borrowers in a long-term cycle of repeat loans.

Consumer Action joins other advocates in urging regulators to stop banks from offering pay day loans. Research has long shown that payday loans trap borrowers in a cycle of expensive long-term debt, causing serious financial harm to borrowers, including increased likelihood of bankruptcy, paying credit card debts and other bills late, delayed medical care, and loss of basic banking privileges because of repeated overdrafts.

Payday lending has a particularly adverse impact on African Americans and Latinos, as a disproportionate share of payday borrowers come from communities of color. High cost, short-term balloon repayments, and the consequent series of repeat loans, have long been identified by regulators as features of predatory lending.

Lead Organization

Center for Responsible Lending (CRL)

Other Organizations

AARP | Accion, The US Network | AFL-CIO | AFSCME | Alliance for Retired Americans | Americans for Financial Reform | Black Leadership Forum | BWICA Educational Fund, Inc. | Calvert Investment Management, Inc. | CDFI Coalition | Center for Community Change | Center for Economic Integrity | Center for Responsible Lending | Church of England Ethical Investment Advisory Group | Coalition of Religious Communities | Community Action Partnership | Community Development Venture Capital Alliance | Comprehensive Community Action Program | Consumer Action | Consumer Federation of America | Consumers for Auto Reliability and Safety | Consumers Union | Corporation for Enterprise Development (CFED) | Courage Campaign | Democratic Processes Center, Inc | Demos | Dominican Sisters of Hope | Dominican Sisters of Hope Justice Committee | Evangelical Lutheran Church in America | Everence Financial | Fair Share Alliance | Fifth Avenue Committee | First Affirmative Financial Network | First Nations Development Institute | Franciscan Sisters of the Atonement | Friends Fiduciary Corporation | Green America | Heartland Alliance for Human Needs & Human Rights | HomeFree-USA | Housing and Economic Rights Advocates (HERA) | Housing Help Inc. | Identika LLC | Innovative Changes | Insight Center for Community Economic Development | Intercommunity Peace & Justice Center | Interfaith Center for Corporate Responsibility | Lawyers’ Committee for Civil Rights Under Law | Leadership Center for the Common Good | Mercy Investment Services, Inc. | Mission Asset Fund | Missionary Oblates USA | NAACP | National Alliance of Latin American & Caribbean Communities (NALACC) | National Association for Latino Community Asset Builders | National Association of Consumer Advocates | National Consumer Law Center (on behalf of its low income clients) | National Fair Housing Alliance | | National People's Action | Neighbors Helping Neighbors | NETWORK, A National Catholic Social Justice Lobby | PathStone | PICO National Network | Public Citizen | Resource Generation | Rural Dynamics Inc | Sargent Shriver National Center on Poverty Law | Sisters of Charity of the Blessed Virgin Mary | Social Justice Committee, Unitarian Universalist Congregation at Shelter Rock, $300 million under management | The Fund for Community Progress | The Greenlining Institute | The Housing Research & Advocacy Center | The International Brotherhood of Teamsters | The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) | The Leadership Conference on Civil and Human Rights | The National Advocacy Center of the Sisters of the Good Shepherd | The Needmor Fund | The Resurrection Project | Trillium Asset Management | U.S. Labor Against the War (USLAW) | U.S. PIRG | United Church Funds | United Church of Christ Justice and Witness Ministries | Ursuline Sisters of Tildonk, U.S. Province | USAction | Woodstock Institute | Xaverian Brothers | Zevin Asset Management

More Information

For more information, please visit the CRL website.

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Payday loans are dangerous for consumers   (BankPaydaySignOnLetter3-13-13.pdf)

 
 

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