MyBlack^® Wealth

Payday Lending Abuses Reined In, As Colorado Joins Other States in Reform

Source: Progressive States Network

The payday lending trap has been shorting working families to the tune of nearly $5 billion per year ever since the industry exploded onto the scene in the 1990’s. The number of payday lending institutions has jumped exponentially from 500 in 1990 to about 22,000 today (compared with 14,000 McDonald's), mainly targeting low-income African American and Latino communities. But two weeks ago, Colorado enacted payday industry reforms, squeaking by with a one-vote margin in the Colorado House. Though lenders can still charge a $75 origination fee as well as monthly fees of up to $30 on top of interest, the bill addresses cycles of debt by capping APR interest rates at 45% and mandating that borrowers be given as long as six months to pay back loans. Colorado’s joins sixteen other states and the District of Columbia which have already passed limits on interest rates for short-term loans, ranging from 17 percent to 60 percent.

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