I-Team Report: Preying on Payday?

(Source: WNEM)

Keyiatta Miree is a single mother from Saginaw

“It’s just hard out here, it’s like you gotta live day-to-day. But I’m still going to make due no matter what.”

She’s been using pay day loans for three years and told the TV5 I-Team she’s probably had to pay enough to buy a house during that time.

She’s pregnant with her 9th kid and she’s going to medical school. She said it’s hard to keep up.

“I have support out here, but you try not to ask people. You try to do stuff on your own.”

The big problem she has with payday loans is the interest.

“They squeezing people with this interest.”

According to the Attorney General’s Office, payday loan companies can charge you up to 15 percent on a loan.

That means for every $100 you borrow, you are paying back an extra $15.

That may not seem like much, but the annual percentage rate is 391 percent.

“the moment you walk out, you’ve probably racked up a couple of bucks just in interest expense.”

Melanie Duquesnel with the Better Business Bureau told the I-Team most payday loan users get stuck in a cycle of debt.

“Most people will get that money and get distracted by life.”

Duquesnel said payday loan companies can get away with charging those high rates because they know if you’re using one, you’ve got no where else to go.

“You can’t borrow from a credit union, you can’t borrow from a bank. You’re already considered a high risk, so they charge interest rates to go along with that risk.”

She said there are regulations on what can be charged, but the Federal Trade Commission is lenient.

“It’s just not a big enough industry that they feel that there’s enough damage done.”

But Keyiatta said, damage is done, and she wouldn’t recommend that anybody try pay do loans if they can help it.

Duquesnel said if you’re in a situation considering a payday loan to exhaust all other options first. Ask to borrow from friends or family, or see if your church has a benevolence fund.

Copyright 2018 WNEM (Meredith Corporation). All rights reserved.