Payday loan concerns
| Thursday, Jul 02 2009 10:17 PM
Last Updated Thursday, Jul 02 2009 10:17 PM
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The state Legislature risks worsening the difficult financial circumstances of many low-income Californians with AB 377, a payday lending bill that maintains the high-interest status quo of a dubious industry.
So-called payday loans are short-term arrangements that can ease temporary cash-flow problems, but many borrowers rely on the transactions on a regular basis. A $255 loan would typically allow the lender to charge a $45 fee, more than 10 times what the same amount would accrue on a credit card if it were paid off within 30 days. But people who use payday loans often don't qualify for credit cards.
So they dig themselves even deeper holes with payday loans. Now comes AB 377, which would enable them to dig deeper still by raising the maximum amount of a payday loan from $300 to $500.
The measure is being sold as an alternative for cash-strapped families, but more likely it will only put them in worse fixes. The Legislature is urged either to revise the bill or reject it.
