Dr. Martin Hash Podcast

High interest, so-called Payday loans, are often demonized but the reality is totally different. Convenience and routine are valuable, and traditional banks, with their inconvenient practices, feeling of elitism, and constant fees are not an attractive alternative to many people. In fact, predatory banking overdraft charges and interest penalties could easily exceed the cost of a Payday loan. The interest amount on a Payday loan is about the same as many credit cards but nobody seems to care about them, and credit cards can compound relentlessly whereas the local Payday loan place knows you, and advises you to pay-up in the nicest way possible. A lot of people just need that nanny-like intercession to stay above water; though make no mistake, people who use Payday loans don't have a lot of options.

Payday loans are big business; you can find them in failing strip malls around America unless the local politicians have made them the scapegoat of failed social policy, and banned their presence, even though every payday you can see a line of people waiting to pay 15% for the 2 weeks since their last paycheck; they're always one check behind. It seems rather ridiculous but obviously a lot of people start a job, get a loan, pay it when they get their first check, then borrow until their next paycheck. This is not the same as the Check-Cashing business that takes 2% off the top to cash this week's check. All things considered, Payday loans satisfy an important social need; it's immaterial that they prey on human weakness, so do hair-dressers and dietitians.