Payday in AZ

I don’t generally follow the banking industry, nor do I claim to know much about it, but I’ve got a sneaking suspiscion that payday loan places are a rip-off.

So I was intriuged to find out that Arizona now has more payday loan businesses than Starbucks and McDonalds–combined.

From Tri-State Online:

The number of pay-day loan offices in Arizona has nearly tripled in the last four years, drawing concern that low-income residents are being exploited and the state’s economy is being drained of millions of dollars.

The loan operations typically give cash advances against a borrower’s next paycheck, but fees and interest can add up to a rate that would work out to 460 percent annually.

The state has 610 pay-day loan offices – more than the number of McDonald’s restaurants and Starbucks coffee shops combined – The Arizona Republic reported Sunday. Most of the firms are in low- and middle-income neighborhoods.

Critics accuse the firms of exploiting those who can least afford high charges, and some elected officials want to restrict the expansion of such operations and strengthen consumer protection.

Pima County is looking to restrict the industry’s expansion, and a proposal surfaced at the Legislature last session to reduce maximum interest rates that could be charged.

But companies that own pay-day loan offices say they are providing a needed service at a fair price for people who would otherwise have difficulty borrowing money.

Pay-day loan centers explode

Just a note: growing in in Atlantic City, there were so many “Cash for Gold” places that I thought every major city had three or four per city block. Even so, when I moved to Vegas I was astounded at the number of payday loan and pawn shops there. We’ve even got pawn shop chains here.

On one hand, you could say that society would be better off without payday loan businesses, but would that just lead to a rise in loansharking? There are never any easy answers.

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