Taxi fares cost an enormous amount per mile, but are not intended for a long haul. So if I get in a taxi cab, I see the rate, and then I proceed to ask the driver to drive me around town for the next 10 hours, should we shut down the transit system then because they are charging a ridiculous amount and praying on my lack of transportation?
The payday loan war going on is political rhetoric. The industry is an easy target for politicians who have done nothing else during there term and are looking for that one little thing that makes them look like they have accomplished something. The basics of the payday loan system are not so far beyond anything we currently use. Everyone is upset about this triple digit APR that they fail to actually look at how easy it is and what you probably already have that runs you triple digit APR’s.
For example: If you translate the fee for overdrawing your checking account by $100 (at an average overdraft fee of $26.68), you would be looking at 696 percent APR.
But you don’t see politician screaming to shut down Bank of America now do you. How is it legitimate to charge me 696% APR on $100 overdraft, but 348% on a $500 payday loan is ludicrous.
For more examples of high APR situations that you may not know about but have, read our post about The Lies About Payday Loans.
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I am glad you found this article useful and I hope to write future articles that will help show both sides of this endeavor.