Nov 3, 2008
About one million Californians took out so-called “payday loans” in 2006, according to a survey published by the California Budget Project.
These short-time loans are very expensive: for a 14-day loan, borrowers typically end up paying fees that would amount to more than 400%. This, in fact, is above the interest rate caps under the California Finance Lenders Law. But state officials not only looked the other way – the state legislature even passed a law in 1996 allowing such outrageous fees on payday loans.
Needless to say, only people desperate for cash would accept such a rip-off. Most borrowers are working people with steady jobs, who can’t make ends meet. About 60% of them are women. About three out of four borrowers said they used payday loans to pay bills or buy groceries and other necessities. And about half of the borrowers said they took out loans at least once a month.
Low pay for full-time work, skyrocketing prices, bloodsucking loan sharks – this is the reality of life in capitalist America. With a huge, and long, economic crisis looming, we can expect things to get even worse for workers and their families – if we accept the future the capitalists have prepared for us.