Payday lenders law is paying off
Washington state has one of the highest rates of payday lending in the nation, but thanks to a 2010 law limiting the number of times customers can borrow money, payday lending is on the decline.
According to a study from the Pew Research Center released this summer, 11 percent of people in Washington use payday lending. The only state with a higher rate is Oklahoma, with 13 percent.
In 2010, legislators clamped down on the practice, creating a law backed by the Statewide Poverty Action Network (span) that prohibits people from taking out more than eight payday loans a year, and for no more than $700 in a month, from any payday lender, including the Renton-based Moneytree.
“That loan limit acts as a circuit breaker,” preventing people from borrowing money one month and then coming back the next month for another loan to pay off the first, said Marcy Bowers, director of span.
The law has had the intended effect. The number of payday lending locations dropped 40 percent in 2011, after dropping 30 percent in 2010. In 2005, Washington peaked at 716 payday lending locations. In 2011, Washington state had just 256 payday lending locations.
The dollar amount of money borrowed has dropped, too. Lenders loaned
$1.4 billion with high interest fees in Washington in 2005. That amount dropped to $327 million in 2011.
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