With retirement and disability income, erican mother and grandmother brings in about $1000 per month. Like many borrowers, she had to take out a second loan to pay off the first. She now has loans with four payday lenders. “When I get a little extra money, I’m going to pay them off and I’m through with them,” said Mary. “It’s a rip off. There’s nothing cute about it. I’m supposed to get some money, but I lose money.” The fees Mary has to pay to keep from defaulting on her payday loans add up to over 40 percent of her monthly income.
Sandy Hudson’s* first payday loan was for $100, with an $18 fee. All she needed was a source of income and a banking account, so she walked into the shop, and walked out 15 minutes later with the loan. Sandy got caught up in the payday lending debt trap, taking out multiple loans to pay the fees on each one as they became due. At one point, she was paying $300 every two weeks for four different loans. Over a six month period, this added up to $3600, but she was in the trap much longer, paying off one loan, then another, until she lost her job and could no longer keep up with the fees. She filed bankruptcy.
At one point, $800 a month of the family’s money was going towards payday loans
Whitney, who lives in Florida, was caught in the debt trap for nearly three years. During that time, she juggled ten payday lenders, spending her lunch hour going from one lender to the next rolling over the various loans. When she was on the brink of bankruptcy, several lenders bombarded her with threats of revoking her driver’s license, turning her in to the Attorney General’s office, and filing criminal charges.
Betty, a senior citizen in Durham, North Carolina, paid over half of her $564 monthly Social Security income in payday fees, never paying down her loans. She lost her phone and needed emergency help from social services to avoid eviction.
Edith, an Asheville, North Carolina single mother, cut down on her family’s groceries, stopped driving her car, and kept her lights off to save electricity as she scrambled to pay the fees on her payday loans.
Paula, who lives in Texas with her husband and 3 children, took out some payday loans through lenders on the Internet after her husband lost his job. After he started working again, they were never able to get out of the debt trap due to excessive rollover fees.
She worked down the street from the payday shop, and since she was short on cash, she called to see what she needed to get a loan
Danny, a forklift operator from Kannapolis, NC, paid more than $5,000 in fees to payday lenders over two years. He has over 170 check stubs from payments made to these lenders.
Melissa has had as many as seven payday loans going at the same time. She has recently paid $346 every two weeks in fees alone to carry the payday loans. This New Mexico resident has tried to make payment arrangements with the lenders, but they refuse to work with her.
Tennessee resident Natalie has paid over $4000 in fees for $800 worth of loans. Each time that she thinks she is has paid down the principal the lender informs her of more fees that have been piled onto her already steep debt. Additional fees are added every time that she pays late.