Payday Loans are illegal in 13 States for a good reason: the practice literally steals from the poor. The remaining States regulate the practice to varying degrees, but the lenders often ignore the regulations or keep trying new tricks to rob the poor of every last possible dime. For instance, they’ll prey on the strapped via the Internet or use out-of-State banks.

It goes like this…

A startling number of people live paycheck to paycheck, having lost all their savings and equity to America’s long and steady economic decline. These are working people who are financially cornered.

With little or no wiggle room, any financial surprise (home repair, medical emergency, legal action, school trip for the kiddies, etc.) can hobble them. They don’t have no credit or loan equity, so what can they do? Well, your friendly neighborhood Payday Loan Shark comes to the rescue!

The methods vary from State to State, but it’s basically the same. These companies will pay you an advance against future paychecks. Sounds innocent enough. Even their fees sound innocent enough - if you don’t use a calculator or common sense.

You have to fill out some paperwork first to establish that you are regularly employed and are good for the money. Then they’ll lend you an amount that can be covered by your next paycheck(s) for a certain finance charge. Plus maybe a handling fee. Now you write a post-dated check to repay this loan-plus-fees in 2-4 weeks.

Don’t bounce that check, or you’re hit with additional handling charges and penalties.

So let’s say you are paid $400 a week. You need most of next week’s pay right away because if you don’t get your car fixed you’ll lose your job. You borrow $300 from the Payday Loan Shark and write a check for $390 payable in two weeks.

That’s a 30% finance charge in two weeks, which equals an annual percentage rate (APR) of 780%.

But wait - that $390 just ate up your entire week’s check. What do you do? You borrow again and postdate another check for $390. And then another. And another. Unless you win the lottery, it’ll never end. Some people end up paying thousands of dollars a year to these crooks just to keep their head above water!

In a related scam, these same companies will cash your paycheck for a fee. Since a vast number of American workers have filed for bankruptcy in recent years and as a consequence are not able to have bank accounts, they actually have to go to these same predators to merely cash their paychecks. They make you pay to get your own pay.

How do these slime-balls sleep at night?

Scrud Kelley

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