Predatory payday loans exploit low to medium-income populations. People working minimum wage jobs struggling to meet basic expenses or suffering health crises, job loss, or other misfortunes may turn to payday loans.

They may have no access to credit or have been turned down by banks. They borrow small loans to get through to their next pay check, with interest locally as high as 259% annually according to the Minnesota Department of Commerce. They must repay the loan by the next pay period, with 80% of borrowers not able to repay the loan so quickly. A cycle of debt ensues with new fees added to each new loan intended to pay off the previous loan.

Blue Earth County payday loan borrowing per capita is among the highest in Minnesota. Mankato’s payday loan company took in over $196,884 in fees last year, money that could be better spent in our community.

Communities are stepping up to stop payday loans and offer alternative solutions. Moorhead City Council members championed the first Minnesota law capping interest rates at 33%. Moorhead has a university and a population similar to Mankato. Might our City Council also pass a 33% interest rate cap?

South Dakota passed a 36% interest rate cap with positive impact on their state. A wide range of businesses, nonprofit community organizations and reputable financial services like credit unions replaced payday loan companies. Seventeen other states passed similar laws.

Minnesota Sen. Tina Smith co-sponsored bill S.2833 Veterans and Consumer Fair Credit Act that would bring a 36% rate cap to all payday loans. Please thank Sen. Smith and ask Sen. Amy Klobuchar to co-sponsor this bill.

Jane Dow

Mankato

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