Poor? Pay more.
People who earn little money often pay more for financial services because they lack access to low-interest, short-term sources of credit and to banks themselves, according to a report by the Maryland Consumer Rights Coalition. They're also not informed of the high fees they often pay to consolidate debt and for tax refund anticipation loans or payday loans.
The Maryland Consumer Rights Coalition is urging elected officials and government regulators to take more steps to protect the rights of poor consumers and to enforce the laws already on the books.
Interesting to note --- part of the remedy in the 2003 Maryland Debt Management Services Act involves making sure that the print is not-so-fine:
"The consumer must enter into a debt management services agreementThe coalition's recommendations include:
and must receive a copy of the agreement that is in at least 12
point type and sets out the schedule of payments, maintenance
fees and a list of which creditors will receive payments, and a
notice of the right to rescind the agreement by giving written
notice."
--- better oversight and enforcement of existing regulations, including a cap on the annual percentage yield of 33 percent on payday loans;
--- limiting check-cashing fees and creating alternatives for those who can't or don't want to use banks;
--- creating a 'homestead exemption' so people whose homes are seized as part of a legal judgment aren't kicked out onto the street.More details, such as specific ideas for each type of financial service, are available in the full report, which was commissioned by the Annie E. Casey Foundation.
A native of Vietnam, 
Comments
Payday lenders get a bad rap most of the time. When payday loans are used correctly, as they were designed to be utilized, you only pay $15 on every $100 borrowed. That's only 15%! It's when you extend that loan over a year's time that the interest rates get HUGE. Instead of getting rid of the industry, educate people on how to use them.
Posted by: Payday Loans | February 8, 2008 1:03 PM