Payday loans in regulators' cross hairs

A not-so-quiet battle is being waged among regulators, consumer advocates and industry players over who best represents the interests of the 12 million Americans who use payday loans for everything from emergency car repairs to everyday expenses.

As I wrote in a recent column, alternatives to payday loans have been introduced to offset what critics view as predatory products, with much of the opposition led by faith-based organizations frustrated with regulators' failure to stem the growth of the $38.5 billion industry.

Critics charge that these small dollar, short term loans, due in full on a borrower's next paycheck (hence the name payday loans), snare the working poor in a debt trap. A Pew Research Foundation study released in 2013 found that a borrower taking out a $375 loan ends up paying $520 in interest and fees, including taking out new loans to pay off previous loans over the average 10 month life in a typical borrowing cycle.

http://www.startribune.com/payday-loans-in-regulators-cross-hairs/396875041/