Public Testimony Shines Spotlight on Significant Harm Caused by Triple-Digit Interest Loans
SAINT PAUL, MINNESOTA — Today, the House Commerce Committee approved bipartisan legislation to address a harmful cycle of debt caused by predatory payday lending. Rep. Jim Davnie (DFL-Minneapolis) presented HF 1501, which would cap the interest rate and annual fee on payday loans at 36%. Minnesota Attorney General Ellison testified in support of the legislation.
“HF 1501 is a common sense solution to predatory lending in our state,” said Rep. Davnie. “Hardworking Minnesotans deserve and need access to safe and responsible resources, not a system designed to take them in and milk their bank accounts over the long term, leaving them worse off and without funds to cover basic living expenses. It’s high time Minnesota joins those states that put reasonable limits on the rates of loans for struggling consumers.”
At a public hearing, a former payday borrower, advocates, and experts described the financial destruction caused by loans carrying 200% to 300% annual interest rates with unaffordable terms that create a cycle of debt. Sixteen states plus the District of Columbia cap annual interest on payday loans at 36% or lower to disrupt this cycle of debt. Congress passed a similar 36% cap on loans to active-duty military at the urging of the Department of Defense, after the DoD documented financial harm from payday loans so significant that it impacted military readiness. Continue reading “House Commerce Committee Approves New Tools to Address Predatory Payday Lending”