Senate Looks at Regulating Payday Loans

Filed in archive Law , Quick introduction on January 16, 2010

© rinkjustice


Payday loans have drawn a lot of media attention recently as the US Senate looks at increased regulation for the financial industry. The U.S. Senate to wants to create a new Bureau of Financial Protection that would protect the interests of U.S. consumers.

Think about the logic. You can use a cash advance on next week's pay check to pay last month's electric bill. Or get a quick and easy payday loan to make a down payment on a new car. It seems twisted - borrowing from tomorrow to pay off yesterday's bills.

In 13 US states, payday loans are simply illegal because they violates usury laws or are viewed as exploiting consumers. Should payday loans be legal? You can think about them in two ways. Those who like payday loan services say that they let the normal people solve their cash flow problems. Those who don't like the service say the loans take advantage of consumers - with annual interest rates of almost 500% on the money they borrow.

It's a good argument for teaching your kids money management. What else can you do?

For now it looks like the payday loan industry may be left alone. The Senate has evidently decided not to include payday loans in any new financial regulations.