Payday Loans

Marketed as a way to help consumers pay the bills until their paychecks arrive, payday loans trap consumers in terrible cycles of debt, dragging their families more deeply into financial crisis. In return for a loan the consumer provides the lender a post-dated check for the amount borrowed plus a fee. The check is held for one to four weeks (usually until the customer’s payday) at which time the customer redeems the check by paying the face amount or allowing the check to be cashed. Payday lenders encourage their customers to get on a debt treadmill by refinancing one payday loan with another. The fees for payday loans are exorbitant with effective interest rates that can top 1,000 percent.

Policy Analysis and Advocacy

Press Release: Consumer Groups Applaud Legislation to Halt Check Kiting for Loans, June 27, 2007 PDF 15KB

Press Release and Report: Utilities and Payday Lenders: Convenient Payments, Killer Loans, June 5, 2007

Letter: Regulatory Alert Letter to All State Bank and Other Regulators Regarding Payday Lending and Related New Scams, November 2005 PDF (87KB)

Chart: Revised Chart of State Payday Loan Charts, November 2005 PDF (94KB)

Summary: Updated Summaries of State Payday Loan Laws, November 2005 PDF (233KB)

Model Deferred Deposit Loan Act: to protect consumers who enter into short-term, high rate loans from abuses that occur in the credit marketplace when such lenders are unregulated.  

Analysis: Deferred Deposit Loans