Industry critics charge that the $15 fee that payday lenders charge for a two-week $100 loan is exorbitant, amounting to 391 percent annually if the loan is rolled over for a year, accruing $15 every two weeks. The Community Financial Services Association of America, an industry group, did the math on the rates incurred with other options, and finds that a $100 bounced check garners a $54 fee, which comes out to an annual percentage rate of 1,409 [percent], and a $37 late fee on a $100 credit card balance amounts to an annual percentage rate of 965 percent.so, should uncle sam kill payday lending to save poor people from cheaper credit? or should he instead force lenders to provide credit to those same folks, even when it may be a bad idea?
09 February 2008
do-gooders do bad
an interesting payday lending statistic from the March issue of Reason: