Payday loans are a frequent cause of trouble for struggling debtors, both in Florida and throughout the United States. The short-term loans often carry significant fees and interest rates that greatly exceed those which apply to most credit card agreements.
Borrowers tend to run into the most trouble when they cannot afford to pay back their loans on time. They then encounter even more fees when they have to renew the loan for another cycle.
These issues have drawn the attention of federal policymakers, who are promising to take action. Earlier this month, the Consumer Financial Protection Bureau issued a report condemning payday and deposit advance loans. The director of the CFBP even went as far as to say that “payday and deposit advance loans are debt traps that cause [borrowers] to be living their lives off money borrowed at huge interest rates.” The agency is expected to start regulating these loans in the near future.
According to the Community Financial Services Association of America, more than 19 million payday loans are issued in the United States. The CFPB’s report found that the typical borrower needed to take out 10 loans over the course of the year, paying an average of $458 in fees.
It is important for people struggling with payday loans to know that they have options. Filing for bankruptcy can discharge most debt, including payday loans and any underlying medical or credit card debt that may have led the borrower into financial trouble in the first place.
Source: CreditCards.com, “Feds crack down on payday loans, deposit advances,” Fred O. Williams