Are Payday Loans Like "Stealing"?

March 9 2010, 9:54 AM

Kasie Oliver told Colorado lawmakers during a hearing yesterday that she took out a $400 payday loan to help cover extra bills incurred when her grandchildren came to live with her. A mere eight months later, she had failed to dig herself out of her financial hole and could no longer keep up with the 300 percent interest rate on her payday loan. So she filed for bankruptcy. "It's robbing, it's stealing. It's not the right thing to do," Oliver told 9News before her testimony in favor of a bill that would cap the interest rates on payday loans at 36 percent annually. Outside the Capitol, more than 300 people gathered to defend the industry, which employs hundreds around the state, saying a cap would harm business and consumers. "The truth is our customers know what it costs to borrow money, and compared to the fees associated with bouncing a check, paying a credit card bill late, and even with many ATM charges, it costs less to get a payday loan," claims Deisi Pinedo, a district manager for Advance America. In recent years, efforts to bring greater regulation to the payday-loan industry have been defeated, but last night, a house panel approved Bill 1351 (via The Denver Post). The industry has exploded since 2000, when lawmakers eased restrictions on it. Back then there were just around 200 lenders in the state offering payday loans. In 2008 (the most recent data available), that number climbed to 610.