Kai Ryssdal's 'Marketplace' on payday loans: 'Trapped in Financial Quicksand'
November 30, 2006 - Chicago, Illinois
American Public Media's news program Marketplace (heard on NPR broadcasts nationally) tonight ran a segment highlighting the Center for Responsible Lending's new report about payday loans titled 'Financial Quicksand.'
Below is the transcript from the program's segment that dealt specifically with the payday loan industry.
The original transcript for the entire program can be found at American Public Media's Marketplace. We have provided the transcript below.
Transcript of Marketplace's "Trapped in Financial Quicksand"
KAI RYSSDAL: They call it living paycheck to paycheck. But what it really is, is living paycheck to almost paycheck. For millions of Americans, the money actually runs out before the next time payday rolls around.
Enter the payday loan. Usually just a couple of hundred dollars, they're designed to cover people when they're in a pinch. But what they actually do is trap people in debt. Diantha Parker reports from Chicago on a new study out today.
DIANTHA PARKER: The report is titled Financial Quicksand, which gives you an idea of what the Center for Responsible Lending thinks of payday loans. Here's how CRL President Mike Calhoun puts it:
MIKE CALHOUN: It's like throwing a drowning person an anvil rather than a life preserver.
PARKER: Typically, a borrower will take out a $300 loan and the lender will asses a $45 fee. Borrowers who can't pay the loan back on time, will have to take out another loan and pay another fee. This puts them into a cycle of debt, says Calhoun.
CALHOUN: Over 60 percent of the payday loans in the country go to borrowers who take out 12 or more loans every year.
PARKER: That adds up to more than $4 billion in fees paid to lenders every year. But lenders say people prefer their loans to the alternatives. Lindsey Medsker is spokesperson for the Community Financial Services Association of America, the payday lenders' main trade organization.
LINDSEY MEDSKER: When people are in need of 100 or 200 dollars today but they don't get paid until next Friday, their choices are, you know, write a check and have it bounce, or pay a bill late and be assessed a late fee, or have overdraft protection kick in. And all of those things can be much more expensive than payday lending.
PARKER: And the new study shows that all one shop needs is about 250 repeat customers per year to make a profit.
In Chicago, I'm Diantha Parker for Marketplace.
American Public Media, Marketplace, "Trapped in Financial Quicksand"
Related Stories - Illinois
- Illinois' payday loan problem is far from over [December 27, 2006]
- 'Marketplace' on payday loans: 'Trapped in Financial Quicksand' [November 30, 2006]
- Report blasts payday lenders [November 25, 2006]
- Dan Rather Reports criticizes payday loan industry [November 23, 2006]
- Illinois fines payday lenders $500,000 in 10 months [November 1, 2006]
- Blagojevich's payday lending reforms save Illinois borrowers $6.4 million [October 31, 2006]
- PLS payday loan store donates $18,000 to schools [October 22, 2006]
- Blagojevich calls for federal payday lending protections [September 7, 2006]
- Payday loan crackdown ... Blagojevich aide politicizing issue [July 12, 2006]
- Illinois State: Fine AmeriCash for alleged overcharges [July 7, 2006]
- Blagojevich turns up heat on payday lenders again [June 28, 2006]
- Payday lenders win one in court [June 1, 2006]
- New rules seek to reform small loans [April 5, 2006]
- State revokes licenses [April 5, 2006]
- Payday loan law put on hold [February 11, 2006]
- Illinois issues fines under new payday loan law [December 21, 2005]
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