House Finance Committee Holds Hearing on Payday Lending
The outlook for cutting the interest rate charged by payday lenders remains unclear after the House Finance Committee Wednesday voted to hold two related bills for further study. Supporters and opponents describe the issue in completely different ways.
A coalition of nonprofits, faith groups and others has been trying for three years to cut the interest rate charged by payday lenders. They point to how the typical annual interest rate is the equivalent of 260 percent. State Treasurer Gina Raimondo was among those calling payday lending a bad business for Rhode Island.
“For the majority of borrowers, these loans are not one-time transactions. This is a predatory product designed to trap people in a cycle of debt.”
Representatives of the payday loan industry call the service they provide a useful one, and they say consumers are the ones choosing to use it. State figures show Rhode Islanders took out more than 70 million in payday loans in 2012. The House Finance Committee held for further study two bills to cut the interest rate charged by the lenders.