It’s been awhile since I blogged about payday lending, so let’s recap a little bit.
Payday loans are made in small amounts but come at an extremely high cost, typically carrying annual interest rates of 300% or higher. They are called payday loans because they generally must be paid back in full, with all interest and fees, on the borrower’s next payday. Believe it or not, payday borrowers are twice as likely to file for bankruptcy as applicants whose request for a payday loan was denied by the lender.
Pennsylvania does not currently have thousands of payday loan storefronts as you will find in states like Florida and Utah because our state law puts a low cap on the interest and fees that payday lenders can charge. Loyal readers will remember that in the last legislative session Rep. Chris Ross of Chester County introduced — and the House passed — legislation to open the door to payday lending in Pennsylvania. The bill died in the Senate.
Ever since, payday lenders have been lobbying state Senators to reintroduce the bill. Their efforts paid off late Friday afternoon when Senator Pat Browne introduced Senate Bill 975 and hastily scheduled a vote on the bill in the Banking and Insurance Committee today.