Payday Loan Lowdown

A recent from the U.S. Government Accountability Office states that a Fort Drum board whose responsibilities include heading off predatory lending practices didn’t even meet for four years! This fact came to fore when the GAO’s Valerie Melvin testified before the House Financial Services recently about financial issues facing U.S. Service members. Newswatch50.com reports:

She said the Department of Defense established Armed Forces Disciplinary Control Boards which can make recommendations to place businesses off-limits to service members to protect families from unfair business practices.

Read more: GAO: Military Disciplinary Board might have prevented payday loan ripoff

You can probably relate to Elizabeth Lawson’s story. Her troubles began with an $800 electric bill, the result of a malfunctioning water heater. Since she didn’t have the money on her, she went to a payday lending store nearby and borrowed $200. She was hoping to pay it off with her next Social Security check. But before she knew it, Lawson was so deep in debt that she had to borrow from one payday lender to pay off another.

And guess where all this borrowing and juggling leaves Lawson? Close to bankruptcy! Today, revolving-door loans like Lawson’s have become quite common. The nonprofit Center for Responsible Lending estimates more than 90 percent of these small, short-term and high-cost loans go to repeat borrowers.

You can probably relate to Elizabeth Lawson’s story. Her troubles began with an $800 electric bill, the result of a malfunctioning water heater. Since she didn’t have the money on her, she went to a payday lending store nearby and borrowed $200. She was hoping to pay it off with her next Social Security check. But before she knew it, Lawson was so deep in debt that she had to borrow from one payday lender to pay off another.

And guess where all this borrowing and juggling leaves Lawson? Close to bankruptcy! Today, revolving-door loans like Lawson’s have become quite common. The nonprofit Center for Responsible Lending estimates more than 90 percent of these small, short-term and high-cost loans go to repeat borrowers. Chron.com reports:

The payday industry says its loans aren’t designed to serve consumers with long-term financial needs. Instead, the lenders say they fill a void in the small, unsecured loan market by extending credit to people in a short-term crunch, perhaps because of a major car repair or medical bill.

Read more: Revolving door: Borrowers keep returning to payday lending stores