Don't Forget About Payday Lending!
Two weeks ago, Gary Rivlin made a guest appearance on NPR’s Fresh Air in a program entitled “Turning poverty into a Multibillion-Dollar Industry”; he spoke about what he calls the “fringe-financing and poverty” business composed of payday lending, pawn-broking, rent-to-own businesses, and other similar industries.
Rivlin points out that industries like payday lenders target and take advantage of the working poor and those who live hand-to-mouth. Payday lenders make big profits by lending money at high interest rates, regardless of the lifespan of the loan. Faced with a sense of urgency to pay off loans and bills, the working poor fall prey to payday lenders’ false reassurances. Eventually, they find themselves in a cycle of debt because they are still unable to pay back all their bills and loans and may feel pressed to take out even more payday loans.
Payday lenders aren’t the only ones guilty of these predatory practices. Industries like rent-to-own businesses are also ones to be wary of. They make their money by selling products for over twice their worth through misleading payment plans; a consumer can end up buying a $500 television for $1200!
The most outrageous issue of all is that these big industries see nothing wrong with what they’re doing. In fact, payday lenders even regard themselves as “noble” because they “provid[e] an essential service for the person who otherwise would be trapped.” In theory, they are noble, but in practice, they are quite immoral.
(Photo: Thomas Hawk)