Payday Lending continues to prey on the vulnerable

I have written several times about the payday lending industry. The industry is the worst form of legitimized usury and preys on the people who need help.

With flipped loans (where a new loan pays off an old loan), the effective annual percentage rate (APR) of interest can build very quickly. The average borrower will flip a loan several times, so the APR can grow to over 1000%.

Many states have clamped down on the industry, placing a ceiling on the APR that can be charged. But, the industry continues unfettered in more than a few states.

One of those states is South Dakota. As of this writing, there is a bipartisan proposal that has been placed on the ballot which would limit the maximum APR to 36% per annum. In a perfect world, this ballot initiative would pass.

But, to combat this common sense proposal, the payday lending industry has put forth its own ballot initiative which would limit the maximum to 18% per annum. Wait, you may ask, isn’t that better? Well, there is a significant catch. The payday 18% ballot initiative says, the maximum will be 18%, unless the borrower agrees to a higher rate. Why would the borrower agree? To get the loan  the lender is willing to lend. So, the lower maximum is moot.

I do not begrudge a company trying to make money, but taking advantage of vulnerable people is poor form. This is such poor form that Dante created a special layer of hell for usurers in his Inferno. And, the Christian bible is not too kind to these predators noting usury as a sin, especially when it involves poor people.

If you know anyone in South Dakota, please encourage them to vote for the 36% maximum APR ballot initiative. The industry 18% ballot initiative ruse is just a continual license to perpetuate fraud. It is the ultimate bait and switch. And, please do everything in your power to avoid payday loans and tell anyone who asks to do the same. Payday lending is a self-fulfilling death spiral of debt.


Note: PBS Newshour covered this issue on January 6, 2016. A link follows:



18 thoughts on “Payday Lending continues to prey on the vulnerable

    • Janis, I agree. To allow these companies to prey on our military and their spouses is a shame. You are likely aware the for profit colleges prey on our former military when they return home, as well. Thanks for your comment, Keith

  1. You’re right, of course. Dante placed the usurers in their own circle sitting around a burning pit with heavy bags of gold around their necks — staring at them and waiting for them to increase! He saw it as an attempt to play God, making something out of nothing, ex nihilo. These sinners are deeper in Hell than murderers. Probably even deeper than Donald Trump, though that’s debatable.

    • Hugh, thanks for the better description of hell for usurers in Dante’s Inferno. I remembered them be relegated to lower status than others, but I forgot how they were punished. Trump’s place would be interesting – he exploits people for money and then tosses them aside, he has a thin skin and sues at the drop of hat, he says whatever people want to hear, he holds in disdain anyone who dares questions what he intends to do, he labels people based on looks, religion, ethnicity, disability, economic status, etc. It will be interesting to see his posture when things start going against him. His “I’m winning, so I am great” schtick will wear thin (it already has to many). Thanks, Keith

  2. Note to Readers: Janis brings up about how payday lenders prey on military people. It got so bad, they would have a significant number of payday lending stores just off the military bases. It should be noted that General Petraeus’ ex-wife helps oversee an effort to educate military and their spouses on the risks and gives them a window to complain. In the suggested reads below this post is a previous article on how the flipping builds the APR to a mountain of debt.

  3. I hate this sort of ballot – where a deliberate attempt is made to mislead the voter. This one is particularly loathsome.
    Usually its usually a situation where you vote NO in order to support something or vote YES in order to refuse support. It should be illegal.

    • That has been done here as well, so it takes additional education. The ruse is clever on the I industry’s part, which shows how much money they make off the backs of those in need.

    • Agreed. These other loan options need to be more prevalent. For our homeless families, too many are exposed to predatory car loans, which are well over 20%. So, the bad lenders extend beyond payday lenders.

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