Payday Lenders offer short term loans they say can help meet a cash-flow shortage. But some who take out the loans find themselves in a deeper financial hole. Patty Murray reports from Green Bay.
Colleen is a single mom living in Green Bay. She doesn’t want to give her last name because she’s embarrassed at how she ended up shoveling money into five different payday loans. “Basically how stupid I am. and like I’d go down the street with my mom and she’d say there’s a payday loan, there’s a payday loan there–you can go down one street, like Main street there’s how many payday loans? And now I see those commercials, use them wisely. But you give someone 800 bucks that easily–you think they can afford to pay you back.” Colleen couldn’t afford to pay them back. She owed $850 plus weekly interest charges. Her problem was compounded by a gambling habit she couldn’t afford either. Eventually Colleen lost her house. It all led her to Catholic Charities of Green Bay. Financial Counselor Bobbi Lyson helps many people just like Colleen. Lyson says the situation was bad enough when the loan stores were on ever street corner. But now Googling payday loans will come up with more than six million hits. Lyson says working poor people often don’t have family members with resources to tide them over when an unexpected bill pops up. And when debtors can’t afford to pay the loan off come payday they can roll it over. That’s where the interest starts to pile on. “It gets to the point where they can’t pay rent and they’re facing eviction. So they go to the Salvation Army or St. Vincent De Paul to get assistance so they don’t get evicted. It puts a strain on everything because there’s no money to pay anything anymore.” Payday loans work like this: A person takes out, say, one hundred dollars with the promise to pay it back on their next payday. When that comes and they can’t pay the full one hundred dollars, a debtor can pay $20 to roll the loan over. That amounts to interest of up to 500%. But a spokeswoman for a payday loan industry group says that’s misleading. Erin Kreuger is with the Wisconsin Deferred Deposit Association. She says it’s unfair to gauge payday loans with an annual interest rate because most clients don’t roll loans over week after week. Kreuger says there are other misconceptions about payday loans. “A lot of people are surprised that you have to have a job and you have to have a checking account with available funds before you can get a loan otherwise you’re declined.” Kreuger says payday loans are better than bounced check fees or pawnshops. But through her counseling with Catholic Charities, Colleen says she’s learned it’s better to let a bill slide now and then rather than rack up the loans. Now Colleen says she’s quit gambling and is on a strict budget. “That’s hard too because there’s not always extra money. There’s $10 here, $15 there. But it’s something. And now with Christmas here that’s another hardship. But we’re doing it. I’ve got a roof over my head” And she has advice for others in a cash crunch: “Just don’t get into gambling and don’t get into payday loans.” Both, she says, are losing propositions. The series can be heard on KUWS this week at 8:04 a.m., noon, and the News at 9 p.m.
I just don’t know why they became poorer when they use the Payday loans… Maybe they always applied to payday loans or maybe they file for loans more than what they can afford… For me, I think Payday loans are for emergency only and not just for the necessity of your everyday expenses.
