Pay Day Loan companies don’t just exist to screw people. They exist because there’s a market. I guarantee you that 90% of people who get these loans have no other financing choice. They’ve maxed out their credit cards and none of their friends or family have any money because, chances are, they’re dirtbags. We can debate the reasons for the borrower getting these loans all day long, but the fact remains that they exist because people want them. What happens to that market when you take away their only financing option? Remember, they’re getting the payday loan because they’re DIRTBAGS.

Beer is a fluid that, when overconsumed, can lead to everything from acting like a dumbass to drunkenly crashing your car into another. Maybe we should ban it too. Ditto with smokes, cheeseburgers, sugar and internet porn. Where’s the line?

I know you’re trying to protect the little guy. The little guy knows what he’s getting into. He just doesn’t care.

If people don’t like the interest rate on their card they have options. Switch to a lower rate card or pay your freaking bill in full every month and then you don’t have to pay any interest. Stop spending money you don’t have and you won’t have a problem.

I would think that pay day loans, rent to own, buy now pay later, and all the other schemes companies come up with to extract money from people who don’t really care all that much to read what they sign would be a much better target than credit cards.

Exactly how much interest should be charged? Lets say you want to make a 10% return on your funds and you lend 100 people $1000. At the end of the year you want to have 110000. You know that 3-5% of people will not pay back the money they owe. So lets say in month 3, 6, and 9 one person defaults and you won’t receive the remaining funds.

This means that 1 loan you one receive 3 payments making about 275 bucks, then next only about $550, and finally one you get about $826. After that all the rest of the people pay back their 1100 bucks. So charging people 10% with a 3% default rate for the year will yield somewhere near 8.3%.

Of course, then there are transaction fees and things like that, but then again, in this example 70% of people didn’t use your money and not pay interest on it either.

According to this article: http://money.aol.ca/article/us-credit-card-defaults-rise-to-new-highs/625267/

“American Express default rates jumps to 10.10 percent
Bank of America charge-off rate soars to 10.47 percent
Citi credit card default rate rises to 10.21 percent”

Blame people who borrow money they can’t pay back for high interest, not the company offering the loan.