Payday loans are unsecured, small-sum, short-term (two weeks, for example) loans ostensibly designed to tide a borrower over until the next payday—hence the name. The problem comes because many borrowers can’t pay them off in that short time span. So the debt rolls over—with high fees that make it even harder to pay off. If the loans keep rolling over, the fees just multiply and the sum can become nearly impossible to pay.

The Center for Responsible Lending, an education and advocacy group, says the average interest rate on payday loans is 391 percent. It’s only one type of financing that the group calls “predatory lending” because it preys on poor consumers who often don’t have access to other kinds of lower interest borrowing, such as credit cards.

“The vast majority of payday loan borrowers are using payday loans to handle everyday basic expenses that don’t go away in two weeks, like their rent, their utilities, their groceries,” Diane Standaert, the center’s director of state policy, told a radio reporter. “Payday loans are structured as a debt trap by design.”

An ELCA congregation in Minnesota is standing up to payday lending. Download a study guide to discuss “From hardship to freedom,” which appeared in Living Lutheran’s August 2016 issue. The pdf includes four pages of discussion questions and a copy of the article.

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