A bill being heard in the California Senate Banking Committee Wednesday would limit the number of payday loans consumers could take out and give them longer to pay the loans back. Katie Orr reports from Sacramento.
Battles over regulating pay day loans in California have been waging at the Capitol for years. The loans are for a couple hundred bucks at most, and have to be repaid in two weeks. The industry says it provides a service to consumers who otherwise wouldn’t have access to money. But critics say the sky high interest rates trap people in a cycle of repeat borrowing.
Paul Leonard is with the Center for Responsible Lending. He says the bill under consideration leaves the interest rates alone.
"We are starting with a position of trying to be in a position to compromise. To try to find a middle ground between the two polar extremes that have marked the pay day lending debate in the Capitol for the last four or five years," says Leonard.
The trade for leaving interest rates alone would be a limit of six loans in 12 months per borrower and increasing the repayment period to 30 days.