In the U.S, money is becoming too tight to mention: A recent survey has shown that every third American is running out of funds before the paycheck day -due to the rising cost of living, with those earning less than $50,000 a year taking the biggest hit.
To make ends meet, many turn to banks, friends, and family or ask their employers for early payments. Some, especially those with no access to banking services, fall into the hands of predatory lenders charging hefty fees — one of the main beneficiaries of the COVID-19 turmoil.
Both financial uncertainty and unstable employment have forced many hard-working Americans to take loans with over 36% annual interest rate, prompting some Congressmen to describe predatory lenders as those trapping “working-class communities like mine in cycles of debt.”
Predatory Payday Loans
With job layoffs and incomes down during the COVID-19 pandemic, even more Americans were forced to appeal to small-dollar solutions, such as Fig Loans or CashNetUSA, that provide fast cash often for sky-high interest rates.
“Debt collectors had a big year, and so did predatory lenders,” said Lauren Saunders, associate director at the National Consumer Law Center, to Bloomberg. The story gives an example of a 52-year-old disabled woman, who recently underwent cancer treatment, and borrowed $650 in August 2021. In just a few weeks, she saw her balance top $900 as interest started accumulating at a rate of 325%.
Yet there are worse conditions out there. According to the Center for Responsible Lending, a regular payday loan in Texas comes…