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Don’t let the Grinch steal your holidays!

Date: 
12/06/2010

Campaign warns consumers of the dangers of payday loans

CHICAGO—Members of the Monsignor John Egan Campaign for Payday Loan Reform, including representatives from the Illinois Department of Financial and Professional Regulation, Citizen Action/Illinois, Protestants for the Common Good, Sargent Shriver National Center on Poverty Law, and Woodstock Institute, will gather outside a downtown payday loan store on Monday, December 13 with a real-life payday Grinch to sing carols warning holiday shoppers of the dangers of costly payday installment loans.

“Between a weak economy and the pressures of holiday shopping, the temptation to take out a payday loan can be particularly high,” said Dory Rand, president of Woodstock Institute. “But a loan of a couple hundred dollars can carry triple digit interest rates. Taking out a payday loan can result in serious financial and even legal trouble.”

“Just like the Grinch stole holiday presents and cheer from Whoville, the payday Grinch’s high fees can sap working families’ assets and threaten their financial security,” said Lynda DeLaforgue, co-director of Citizen Action/Illinois. “During the holiday season, we suggest that hard-pressed families get help with budgeting from a reputable consumer credit counselor.  For borrowers with short-term credit needs, we recommend  seeking out lower-cost options, such as borrowing from savings, obtaining a cash advance from an employer, or taking out an alternative small consumer loan with lower fees from a credit union or community bank.”

Beginning in March 2011, legislation championed by the Monsignor John Egan Campaign and signed by Governor Quinn will close a long-standing loophole that allowed 700 percent payday installment loans to trap borrowers in a costly cycle of debt.  Thanks to the new consumer protections, sponsored by Sen. Kimberly Lightford (D-4) and Rep. Lou Lang (D-16), all payday loans in Illinois will be subject to a comprehensive interest rate cap and other important consumer protections, such as a limit on the amount of time a borrower can be in debt, a prohibition on unaffordable balloon payments, and ability to repay requirements.

However, payday loans are still a costly form of debt that targets those consumers who can least afford extra charges and these new protections will not be in place during the coming holiday season.  The Monsignor John Egan Campaign recommends that consumers seek out other options when possible.

“The new payday protections continue the legacy of Monsignor John Egan, who started to fight against usurious loan terms after seeing one of his parishioners fall into a debt trap in 1999,” said Laura Dean Friedrich, Director of Education and Advocacy for Protestants for the Common Good. “We must remain vigilant to ensure that all consumers are protected from abusive, high-cost loans.”

When: Monday, December 13, 2010, 11:00 am
Where: In front of PLS Loan Store, 337 S. Franklin St., Chicago (at Van Buren)
Who: The Payday Grinch

Representatives from:
Illinois Department of Financial and Professional Regulation
Citizen Action/Illinois
Protestants for the Common Good
Sargent Shriver National Center on Poverty Law
Woodstock Institute