Breaking the Payday Lending Cycle

Predatory payday lending practices reportedly costs American families $4.2 billion annually. Marketed as short-term relief for a cash crunch, payday loans can carry annual interest rates of up to 400 percent! According to the Center for Responsible Lending, borrowers who receive five or more loans a year account for 90 percent of the lenders’ business – a clear indication that the payday lending business model is not designed to provide one-time assistance during a time of financial need. There are well over 24,000 payday lending branches across the U.S., and the typical payday loan customer is living “from paycheck to paycheck” and needs a cash-advance to bridge that gap. In today’s economic recession where so many families are struggling to manage household debt, Lily Newfarmer, president and CEO of Tarrant County Credit Union in Fort Worth, fears that more and more families might be tempted to tap into this easily accessible-cash. She cautions, however, that a payday loan is the most expensive type of loan on the market. Join Newfarmer and host Dick Ensweiler as they discuss the appeal of a payday loan and the potential pitfall for unsuspecting customers, who may very likely find themselves in a payday lending debt trap.