Predatory Debt Traps

In the United States, the average annual percentage rate paid on a payday loan is 391%. But payday loans are only one of the many mechanisms that impose triple-digit interest rates on low-income and vulnerable communities. High-cost loans that collateralize a car title, fixed pensions, or expected tax returns can be equally as damaging. These loans frequently cause a cycle of debt from which it can be nearly impossible for individuals, families, and small businesses to emerge. And, while the new Consumer Financial Protection Bureau (CFPB) rules are helpful, they only address certain types of predatory products and thankfully do not preempt stronger state laws.