Kentucky should make sure low-income families have reasonably-priced financial services and do not get caught in the cycle of taking out multiple payday loans with extremely high interest rates. Kentucky can do this by setting a limit on the interest rates that can be charged for payday loans or by limiting the number of payday loans a person can take out each year.
Even though payday loans are advertised as a means for weathering one-time emergencies, 91 percent of loans nationally are made to borrowers with 5 or more loans per year which could add up to thousands of dollars in fees on sometimes very small loans.
In 2010, Kentuckians paid more than $105 million in payday loan fees. As churches, charities, and government agencies work to provide needed support to families, payday loans push many of these families further into debt, requiring additional assistance.
- Kentucky Youth Advocates is a member of the Kentucky Coalition for Responsible Lending (KCRL), a statewide coalition dedicated to protecting family assets by eliminating abusive financial practices.
- In 2009, we conducted focus groups across Kentucky and published our findings in a report A Cycle of Debt: Kentucky Families Share Their Experiences with Payday Lending and Other High-Cost Financial Services.
- In 2007 we partnered with the Brookings Institution to produce The High Price of Being Poor in Kentucky, which recommended curbing unscrupulous lending practices as a way to help low-income Kentuckians keep their hard-earned money.