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Payday and cash advance lenders have a terrible reputation, and rightfully so: they charge exorbitant interest rates and often trap borrowers in a vicious cycle of debt.
They also disproportionately appear in low-income, predominantly Black, neighborhoods. But are they as bad as they seem?
A new bill is moving through congress to regulate them - but critics say it could have unintended consequences that harm us even more.
4 in 5 Americans are living paycheck-to-paycheck and save less than $100 every month - meaning any unexpected expense, like a car repair or medical bill, will leave them scrambling. Payday lenders take advantage of situations like these.
But the same low-income people who depend on payday loans usually also have “bad credit,” so they can’t get a loan from a bank. And most new jobs are low paying, which means things aren’t changing.
So with no bank, no income increase, and rising rent and bills, what are people supposed to do?
Payday lenders are a necessary evil, because getting rid of them could leave many low-income Black people with only dangerous, illegal options like loan sharks.
The real culprit here isn’t payday lenders - it’s racist American capitalism that gives tax cuts to the wealthy and oppresses the poor with no real pathway out of poverty. A radical shift is needed to truly change this!