Payday Loans: 
Debt Trap by Design

Picture
Payday loans are an abusive form of lending that traps cash-strapped borrowers into a long-term cycle of debt.
 
Payday loans carry astronomical rates; with fees and interest they generally are over 300% annually for traditional two-week loans and over 200% annually for longer term loans. Lenders make these loans without regard to a borrower’s ability to repay because lenders obtain access to the borrower’s bank account.  They stand first in line for repayment on the borrower’s payday, leaving the borrower short on cash for other obligations.
 
Payday loans are debt traps by design.  Borrowers get trapped in a cycle of repeat borrowing, causing them to fall behind on other bills, delay medical care, overdraft and lose their bank accounts, and file bankruptcy.
 
Thankfully, Pennsylvania has one of the strongest laws in the country to protect borrowers against predatory payday loans, even when made online. It protects against the traditional balloon payment payday loans as well as the long-term loans that payday lenders peddle in states where they are legal.

But now, out-of-state payday lenders are working to weaken our law so they can flood Pennsylvania with 1,000 storefronts peddling loans that were so harmful to our nation's soldiers that President George Bush signed a law to prohibit them from being made to military families.

Learn more >>


 

Pennsylvanians Oppose: 
Predatory Payday Loans

For the past six years, groups representing millions of Pennsylvanians have been speaking out to oppose predatory payday lending and keep Pennsylvania's strong laws in place. Click here to join our efforts to keep predatory payday lending out of the state.

  • AARP Pennsylvania
  • ACTION Housing Inc 
  • Action United
  • Advantage Credit Counseling Service Inc
  • AFSCME Local 2459
  • American Legion, Department of Pennsylvania
  • Bayfront NATO, Inc.
  • Benedictines for Peace
  • Benedictine Sisters of Erie
  • Berks Community Action Program
  • Bloomfield-Garfield Corporation
  • Booker T. Washington Center (Erie)
  • Bucks County Housing Group 
  • Bucks County Women's Advocacy Coalition
  • CLARIFI (formerly Consumer Credit Counseling Service of Delaware Valley)
  • Chester Community Improvement Project
  • Christian Churches United
  • Community Action Association of Pennsylvania
  • Community Action Committee of the Lehigh Valley
  • Community Housing Services
  • Community Justice Project
  • Community Legal Services, Inc
  • Congregations United for Neighborhood Action (CUNA)
  • Erie Together 
  • Esperanza
  • Family and Community Service of Delaware County
  • Family Service of Chester County
  • Family Services of NW PA
  • Fair Housing Council of Suburban Philadelphia
  • Fair Housing Partnership of Greater Pittsburgh
  • Greater Erie Community Action Committee (GECAC) 
  • Habitat for Humanity Pennsylvania
  • Hill District Consensus Group
  • Homeownership Counseling Association of the Delaware Valley
  • Housing Alliance of Pennsylvania
  • Housing Opportunities of Beaver County
  • John F. Kennedy Center (Erie)
  • Jubilee Pax Christi (Harrisburg)
  • Just Harvest
  • Keystone Opportunity Center
  • Keystone Progress
  • Keystone Research Center
  • Life Works Erie
  • Lutheran Advocacy Ministry in Pennsylvania
  • Metro Erie Meals on Wheels
  • Military Officers Association of America, PA Council of Chapters
  • Montgomery County Community Action Development Commission 
  • Mon Valley Unemployed Committee
  • Multicultural Community Resource Center, Erie
  • National Council of Jewish Women - Pennsylvania
  • Navy Marine Corps Relief Society
  • Northern Tier Community Action Corporation
  • Open Hearth, Inc.
  • Pathways PA
  • Pennsylvania Alliance for Retired Americans
  • Pennsylvania Bar Association
  • Pennsylvania Chapter of NACA (National Assoc of Consumer Advocates)
  • Pennsylvania Council of Churches
  • Pennsylvania Counseling Association of America
  • Pennsylvania Interfaith Impact Network (PIIN)
  • Pennsylvania NAACP 
  • Pennsylvania Public Interest Research Group (PENNPIRG) 
  • Pennsylvania State Education Association (PSEA)
  • Pennsylvania Utility Law Project
  • Pennsylvania War Veterans Council, Inc.
  • Philadelphia Debt Clinic and Consumer Law Center
  • Philadelphia Unemployment Project (PUP) 
  • Philadelphia VIP (Volunteers for the Indigent Program)
  • Pittsburgh Community Reinvestment Group (PCRG)
  • POWER (Philadelphia)
  • Pro-ACT
  • Public Citizens for Children and Youth (PCCY) 
  • Regional Housing Legal Services (RHLS)
  • SEIU Healthcare Pennsylvania
  • Sisters of St. Joseph Neighborhood Network (Erie)
  • Society of St. Vincent De Paul - Council of Pittsburgh
  • Society of St. Vincent De Paul - Philadelphia Archdiocesan Central Council
  • Southwestern PA CLUW (Coalition of Labor Union Women Pittsburgh)
  • St. Martin Center, Inc 
  • St. Martin de Porres Catholic Worker House (Harrisburg)
  • 10,000 Friends of Pennsylvania
  • Tabor Community Services
  • Transport Workers Union Local 234
  • The Pennsylvania AFL-CIO
  • The Pennsylvania State Council of Vietnam Veterans of America
  • The Reinvestment Fund
  • The Sight Center of Northwest Pennsylvania
  • The Women and Girls Foundation of Southwest PA
  • Unitarian Universalist PA Legislative Advocacy Network
  • United Methodist Advocacy in Pennsylvania
  • United Way of Chester County
  • United Way of Erie County
  • United Way of Greater Philadelphia and Southern New Jersey
  • United Way of Westmoreland County
  • United Way of York County, PA
  • Union City Family Support Center
  • Urban Affairs Coalition
  • Veterans Leadership Program of Western Pennsylvania
  • Westmoreland Community Action

Updates and Resources:

Payday Lenders' Bill Stalled
A fast-moving, late-dropped bill that would allow payday lenders to evade our state interest rate cap had been scheduled for a vote before the House Commerce Committee on June 20th. The bill, HB 2429, is yet another sneak attack to make high-cost predatory loans in PA.

Legislators heard the call from a diverse set of voices not to harm our most vulnerable, and the payday lenders currently do not have enough support to move the bill forward.  They are drafting an amendment to the bill.  One idea being floated would legalize high-cost, long-term payday loans, similar to what the payday lenders have tried to pass through the PA Senate in prior sessions.  The amendment has not been released. Stay tuned... In The News
PA Groups Respond to CFPB Rule
Pennsylvania groups applaud the CFPB for recognizing the devastating harm caused by predatory payday lending, and for affirming that state interest rate caps, like we have in PA, are the best way to protect people from abusive lending practices.  Statement available here.
Payday Lenders' Trojan Horse Fails: 2015-2016 Session

The payday lenders were back in Harrisburg.

On June 1, 2015, Senator John Yudichak, who has co-sponsored payday lenders’ bills in prior sessions, circulated a memorandum urging his colleagues to join him in co-sponsoring legislation to legalize a new loan product in Pennsylvania, called the “Pennsylvania Financial Services Credit Ladder.”  

The memo cites current Consumer Financial Protection Bureau (CFPB) proposals as a model for the legislation, as well as a recent study by the Pew Charitable Trust as evidence of the need for these loans.

The problem? Pennsylvania already has one of the strongest payday lending laws in the country.

Since the CFPB cannot set interest rate caps, changing our law by adopting the CFPB rule in Pennsylvania will weaken it. In fact, the same Pew Charitable Trusts study cited in the co-sponsorship memo says that states like Pennsylvania should keep their strong laws on the books.

The bill that was filed, SB 1379, would have legalized long-term predatory payday loans. After quick action by faith groups and military veterans and others, the bill did not pass last session.

Download Resources

In The News- prior sessions