Payday loan lenders get lots of negative publicity with their short-term high interest loans. The reports concern themselves with predatory lenders feeding off the financially vulnerable and addressing the debt which can accrue when these high interest loans are not paid off on time.
Often, the interest of a payday loan will be compared to that of credit cards. When side by side, the difference is staggering. I wonder if the total amount of debt owed to credit cards compared to payday loans would offer such a shocking realization. The large corporations are the credit card businesses. Given the amount of debt owed each year with interest, an individual would be paying a large portion towards this debt.
Payday loan lenders are regulated by the states. Loan and interest caps keep the majority of the market on an even competitive field. There are some states which will only allow a person so many loans out at a time. Credit cards have no regulations; in fact, an individual could have multiple credit cards with the same lender. The payments are broken up between the different account numbers and interest rates are attached to each one. Are multiple low interest rates much different than one high interest rate? At least direct payday loan lenders will only be loaning small amounts where credit balances can run in the thousands.
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