Everyone needs to borrow money, whether it’s for unexpected health care costs, utility bills or other basic items. But not everyone is treated the same.
Have you ever borrowed two or three hundred dollars at interest rates of 350 to 400 percent?
Probably not. You have better alternatives.
Things are different, however, when lower income working Iowans need to borrow two or three hundred dollars. They actually pay triple digit interest rates of 350 to 400 percent because that’s what Iowa lawmakers allow the “payday loan” industry to charge!
Who would borrow money at 400 percent interest? Certainly not middle and upper middle class families. We have access to low interest credit card offers and zero interest car loans.
Payday loan lenders are part of a second, separate credit system, one that exploits low income working and elderly Iowans. These families are “offered” outrageously high interest payday loans where every loan is a rip-off.
Iowa payday loan companies have made millions by targeting lower income, working families in our low wage state.
It is time to make long overdue reforms, reforms that many other states have already made.
In 2019, the Iowa Legislature should:
• Cut the interest rate for payday loans from 350-400 percent to no more than 36 percent.
• Provide borrowers with new payment options to get them off the debt treadmill.
• Encourage banks and credit unions to provide credit to low income borrowers.
I’m a state senator and people at the Statehouse say no one cares about this issue. I don’t think that’s true. I think most Iowans think interest of 350 percent is a trap and should be illegal.
Talk to your local state senator and state representative. Tell them you care about working Iowa families who are being exploited.
Iowa can do what other states have done. We can provide fair credit services to working families.
• Joe Bolkcom is a Democratic state senator from Iowa City. Comments: email@example.com