AT THE CAPITOL: Limit payday loans? - KMSP-TV

AT THE CAPITOL: Limit payday loans?

Posted: Updated:
ST. PAUL, Minn. (KMSP) -

The Minnesota House took a big vote on Thursday that could bring major regulatory changes for short-term payday loans out of concern that interest rates are too high, thus taking advantage of people in need.

The lending practices at the center of the debate are the short-term, under-$1,000 loans that people often take out in emergencies, but the fees can top 350 percent of the original loan.


EXAMPLE: A 14-day loan for $100 will come with a $15 fee, which works out to an annual interest rate of 391 percent.

Rep. Joe Atkins said typical clients of payday loan providers will take out 10 loans annually, and he -- along with many other Democrats -- argue those exchanges create a cycle of indebtedness.

There are many short-term loan providers throughout the metro, but the House bill would limit lenders to just four loans a year for any one borrower and would also prevent lenders from giving a payday loan to anyone who already owes more than 41 percent of their income to other debts and obligations, such as housing.

Republicans argue the bill is far too restrictive on consumers, and they contend that limiting options won't stop problem.

"We're not stopping this behavior," Rep. Sarah Anderson argued. "All you're doing is pushing them to a place where they have nobody to protect their rights."

Rep. Kurt Zellers, who is currently running for governor, said payday customers who hit their annual limit will be forced to turn online.

"That is the wild, wild west," Zellers said. "That is where people are being taken advantage of."

Atkins, however, disagreed.

"Actually, the Internet is not unregulated. We have some regulated, licensed lenders over the Internet here in Minnesota, and if people want to turn to them, that's appropriate as well."

According to Atkins, the main intent of the bill is to prevent customers from becoming caught in a debt trap.

"In some cases, they're paying as much in interest as they are for the loan itself," he said.

36% INTEREST CAP FOR MILITARY FAMILIES

The bill also limits short-term loan interest rates to 36 percent for active-duty service members and their immediate family members.

  • Most Popular StoriesMost Popular StoriesMore>>

  • Adrian Peterson posts bond in Texas, returns to Minnesota

    Adrian Peterson posts bond in Texas, returns to Minnesota

    Sunday, September 14 2014 9:59 AM EDT2014-09-14 13:59:53 GMT

    Minnesota Vikings running back Adrian Peterson flew to Texas late Friday night to turn himself into jail on a warrant for “reckless or negligent injury to a child." FOX 26 in Houston confirmed Peterson was booked into the Montgomery County jail between 1:06 a.m. and 1:35 a.m. Saturday. He posted bond and went to the airport, returning to Minnesota early Saturday morning.

    Minnesota Vikings running back Adrian Peterson flew to Texas late Friday night to turn himself into jail on a warrant for “reckless or negligent injury to a child." FOX 26 in Houston confirmed Peterson was booked into the Montgomery County jail between 1:06 a.m. and 1:35 a.m. Saturday. He posted bond and went to the airport, returning to Minnesota early Saturday morning.

  • Fall color forecast: The colors are coming

    Fall color forecast: The colors are coming

    Sunday, September 14 2014 12:56 PM EDT2014-09-14 16:56:07 GMT
    The recent cool weather should have a big impact in the week ahead when it comes to the colors...
    The recent cool weather should have a big impact in the week ahead when it comes to the colors...
  • PHOTOS: Transforming TCF Bank stadium for the Vikings

    PHOTOS: Transforming TCF Bank stadium for the Vikings

    Wednesday, August 6 2014 10:17 PM EDT2014-08-07 02:17:59 GMT
    The massive steel beams may be going up at the future home of the Vikings, but it'll still be a couple of years before they can stay there. In the interim, they'll be at TCF Bank stadium -- and it's changing to welcome them.
    The massive steel beams may be going up at the future home of the Vikings, but it'll still be a couple of years before they can stay there. In the interim, they'll be at TCF Bank stadium -- and it's changing to welcome them.
Widgets Magazine
Powered by WorldNow

KMSP-TV
11358 Viking Drive
Eden Prairie, MN 55344

Phone: (952) 944-9999
Fax: (952) 942-0455

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | New Terms of Service What's new | Ad Choices