In fact, a recent Pew report says the typical borrower takes out eight payday loans a year, spending about $520 in interest with an average loan size of $375. And though some ignorant lawmakers insist that it's not fair to look at the "annual percentage rate" when comparing these loans with more conventional ones, the fact is that APR is a legitimate measure of comparison, especially since few payday borrowers are in it for just a week or two.
The cycle of payday loans can be punishing, driving low-income workers into even worse situations. Right now, Pennsylvania keeps those lenders out and bans such loans being made on the Internet. And no state has legalized payday lending since 2007.
Those in favor of these offensive loans claim that legalizing them would allow the state to regulate them and add protections; they claim that without these lenders operating in the state, borrowers turn to the Internet. That's a convenient myth. The Pew report claims that very few turn to the Internet if payday lending is unavailable.
According to Pew, 12 million Americans spend more than $7 billion a year on payday loans. Clearly, there is a huge gap between conventional banking services and the people who need them most. We wish lawmakers and others were struggling instead with finding safer, sounder and fairer alternatives, rather than enabling payday lenders to get rich off the poor, while the poor get poorer.
Indeed, the industry argues that they provide a service for the consumers that banks don't like to touch. That they not only take advantage of people in crisis, but wear a halo at the same time, is probably the most offensive part of it all.
And considering the groups who have testified against the industry - the military, religious groups, the AARP and others - how such things can be championed by anyone who works on behalf of citizens defies explanation or logic. We also fail to see how this legislative body, which has a few days remaining in its laughably short session, would make this a priority.
This is a bill that should stay where it is - in committee. Instead, let's get another law in the works: one that requires lawmakers to participate in any venture or industry that they intend to legalize. We bet few of them would want to go near a payday loan - even though they can well afford the cost.