With retirement and disability income, erican mother and grandmother brings in about $1000 per month. Like many borrowers, she had to take out a second loan to pay off the first. She now has loans with four payday lenders. “When I get a little extra money, I’m going to pay them off and I’m through with them,” said Mary. “It’s a rip off. There’s nothing cute about it. I’m supposed to get some money, but I lose money.” The fees Mary has to pay to keep from defaulting on her payday loans add up to over 40 percent of her monthly income.
Sandy Hudson’s* first payday loan was for $100, with an $18 fee. All she needed was a source of income and a banking account, so she walked into the shop, and walked out 15 minutes later with the loan. Sandy got caught up in the payday lending debt trap, taking out multiple loans to pay the fees on each one as they became due. At one point, she was paying $300 every two weeks for four different loans. Over a six month period, this added up to $3600, but she was in the trap much longer, paying off one loan, then another, until she lost her job and could no longer keep up with the fees. She filed bankruptcy.
At one point, $800 a month of the family’s money was going towards payday loans
Whitney, who lives in Florida, was caught in the debt trap for nearly three years. During that time, she juggled ten payday lenders, spending her lunch hour going from one lender to the next rolling over the various loans. Continue reading She took out her first payday loan because she needed “a little extra” money to go out of town