Payday Loans Continue To Come Under Fire

Draped in the American flag in a country fighting multiple wars, the U.S. Senate yesterday heard testimony about the prevalance and ramifications of "payday loans". Drive through any military town and you'll see signs that offer money now in exchange for future wages. While that's a risky business in many cases, the military's stability removes much of the risk. And because of loopholes in lending laws, interest rates soar well past 100%.

Many military installations have specially trained financial counselors to work with service personnel, who do not typically make a lot of money. In some cases, the person is not only making a low wage, but is a young consumer who is inexperienced in such matters.

The Washington Post quotes a Department of Defense study released last month that said nearly 1 in 5 service personnel use payday loans. The U.S. Senate Banking Committee is studing the issue now.

posted by Consumer Help Web Editorial Team at 8:44 AM |