What’s better than eight payday loans at 391 percent interest? Well, 12 payday loans at 391 percent interest of course.
At least that’s the idea behind House Bill 1658 – a proposal that would raise the number of payday loans a borrower may have in a 12-month period from eight to 12.
During the bill’s public hearing today in the House Business & Financial Services Committee, Rep. Steve Kirby, D-Tacoma, said the increase in the loan cap is necessary so people with bad credit or no credit can still have access to credit. To make his point, Kirby retrieved his American Express card from his wallet and said the card enables him to have access to credit every month. The implication, it would seem, is that not everyone can get a credit card. Some people rely on payday loans when they need credit month to month. Telling borrowers that they can only use payday loans eight times a year is like limiting someone to using their credit card eight times a year.
Marcy Bowers, director of the Statewide Poverty Action Network, testified that comparing credit cards to payday loans is like comparing apples to oranges. She said the highest credit card interest rate she was aware of was 36 percent – a figure dwarfed by the 391 percent that the average payday loan issued in Washington has.
The bill would relax a cap established by the state’s 2009 Payday Lending Act.