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Nearly half the people who take out payday loans extend them so many times that they end up paying more in fees and finance charges than the amount they initially borrowed.
That’s according to a new report out today from the Consumer Financial Protection Bureau. The report focuses on repeated borrowing by consumers who take out cash to get them from paycheck to paycheck, but end up mired in a debt spiral that can last for years.
Just a reminder that payday loans are those cash advances, sometimes called ‘check loans,’ in which someone writes a check dated for payday and gives it to the lender. The person gets their money, less the interest, and the lender cashes the check when payday comes — or charges the borrower a fee to extend the loan.
Consumer Financial Protection Bureau head Richard Cordray joins Here & Now’s Jeremy Hobson to discuss the report.