Payday loans can cost consumers 1000’s of dollars more in interest than the original loan

People often turn to payday loans when they have nowhere else to go, regardless of interest rates between 391% and 600% according to the money management website, incharge.org.

18 states have outlawed payday loan companies, including Arkansas since 2008. Although, payday lending is still legal in Missouri, Oklahoma and Kansas. In fact, there are no uniform laws or regulations that govern payday loans in the US, which causes headaches for consumers according to Don O’Brien of the Better Business Bureau.

“The interest rate on these things are astronomical. You look at your credit card statement and see you something, if you have an 18% or 24%, you look at that and your eyes due a double check. Well in the state of Missouri you can put an interest rate as high as 533% on one of these payday loans.”

The Federal Government has taken action to protect members of the military from predatory lending practices with passage of the Military Lending Act that sets a 36% rate on certain payday loans. The BBB warns consumers to review all other funding options before taking out a payday loan.

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