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Kevin Johnson took out a short-term $700 loan and was forced to pay it back in installments totaling $2,611. When he couldn't pay they gave him a new loan for $400 and now he owes $3,5000 total.
Chicagoan sues payday lender after being charged $2,611 for a $700 loan
progressillinois.com - 25 weeks ago - 242 views
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That's some "deal" he ended up with, although credit card interest is also pretty ridiculous and so many people pay it.
Public Broadcasting Corporation station WGBH-Boston produced a Frontline documentary on this very topic.
http://www.pbs.org/wgbh/pages/frontline/shows/credit/eight/responsibilit...
Should we cap interest rates in Illinois which would dry up a much-needed source of lending or should we launch a consumer awareness campaign explaining how compounded interest increases borrowing costs?
Yes, my wife's great grandfather loaned money to coal miners in West Virginia awaiting repayment on payday. Many borrowers died in the mines before they could repay, while compounded interest indebted the rest for longer than the consumer ever expected.
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