I have discussed payday loans and lending on multiple occasions. Payday loans, and their close cousin, title loans, are truly a scourge on society and far too often, lock recipients in a cycle of debt.
The issue of these loans was really brought to light for me a couple years ago when I viewed the documentary, Spent: Looking for Change. Sponsored by American Express and narrated by Tyler Perry, this short (39 minutes) documentary is a film about everyday Americans shut out of the finance system most of us take for granted.
Many of these Americans turn to pawn shops, check cashing services; and use payday and title loans to meet basic financial needs. Of course the practice is quite costly. According to the Pew Charitable Trusts’ Safe Small-Dollar Loans Research Project, an estimated 12 million Americans take out payday loans each year. On average, these borrowers take out eight loans per year, averaging $375 each. The fees over the course of a typical two-week loan? They averaged $15 per $100 borrowed, amounting to a 391% annual percentage rate.
Recently one of my favorite podcasts, On Point with Tom Ashbrook, discussed a new wrinkle in the payday world. Google, a heavy hitter to be sure, is taking a stand, banning ads for short-term, payday loans. As with Spent: Looking for Change, this podcast is worth your time. Give it a listen.