Connecticut does not have payday loans. This is actually a very good thing, as the experience in other states shows: payday loans more often than not put borrowers in debt spirals that are really hard to break free from. Connecticut consumers save $133 million, every year, on fees thanks to this.
Right now, the Consumer Financial Protection Bureau (CFPB) is considering a new rule that will greatly limit payday lending at the federal level. This is important for two reasons. First, it will ensure that Connecticut will no longer face out-of-state lenders trying to litigate their way in. Second, this might help prevent working families to pay outrageous interest rates in short term loans. Just some examples: the typical APR for a two week loan in Texas is 662%; in Ohio, 677%; California, 460%.
So what can we do?
I am writing to ask you to strengthen your proposed national payday loan rule to rein in abusive high-cost loans. Your proposed payday rule sanctions dangerous levels of triple-digit interest rate loans. Our state does not even legalize these triple-digit interest rate loans and we worry that payday lenders will use your rule to seek a green light to come into our state. We ask that you strengthen the rule to close any loopholes and provide states like ours with additional tools to keep unfair and abusive payday loans out of our state. Families in our state are much better off without these unaffordable, debt trap loans.
Is there anything else we can do?
Yes! Has your organization spoken up against payday loans? It should!
The CFPB greatly values comments from advocates and direct service organizations. E-mail us as soon as possible for more details on how, or if you need information, templates or you have any questions.