WASHINGTON, DC -- (Marketwired) -- 04/24/13 -- Yesterday the Consumer Financial Protection Bureau (CFPB) released a white paper with initial findings on payday loans based on data they have collected. As has been shown in previous studies, the CFPB found that there is a demand for this type of loan and they can be helpful to consumers. While the CFPB expressed concern about long-term use of the product, the study did not compare short-term loans to other loan products, the consequences of a lack of access to these products or even how users of short-term credit feel about their experiences.
More than 215,000 consumers from across the nation have joined the Consumer Rights Coalition to protect their access to short-term credit and other financial options. They are concerned that the CFPB has the power to limit their credit choices and take away their ability to make the best financial decisions for their families. In 2011, CRC delivered over 170,000 petition signatures to the CFPB asking that the Bureau not restrict their access to reliable short-term credit options.
CRC wants to ensure that the voices of consumers will be heard and considered by the CFPB. CRC has a new interactive map where you can read and listen to these, and other stories, from real consumers about the importance of a variety of credit options.
I am a survivor of the April 27, 2011 tornado that devastated Tuscaloosa. We lost everything and I was hospitalized for a month from injuries inflicted in the tornado. We had home insurance, but were turned down by FEMA, which hurt us financially. We have been able to slowly get back on our feet, due to help from payday loans. We truly thank them for being there for us.
Sharon K., Tuscaloosa, AL
As a survivor of domestic violence, I had to start my life over again at age 60. Without credit or with poor credit due to job loss and relocation, no one would take a chance on me. I had NOTHING... Without the payday lender option, I would literally, be homeless.
Marsha K., Wellington, TX
The CFPB white paper mentions the first field hearing on payday loans held last year in Birmingham. At that hearing, Director Richard Cordray heard from LaDonna Banks who said that short-term loans provided her a lifeline after she donated a kidney and wasn't able to work. She said, "Short term disability didn't kick in for 3 weeks... I would have been in financial ruin, but that one little gap, that one loan actually helped me and kept me balanced above water."
Consumers choose short-term loans because they are usually the most cost effective and least credit-damaging option available. Research shows that most short-term loan borrowers use the loans moderately, as a short-term solution that enables them to avoid more costly and punitive options like bouncing checks or late bill payment penalties.
Short-term credit is vital to millions of Americans who are struggling to make ends meet in a struggling economy. These consumers do not want the CFPB to limit their credit options without providing an alternative or understanding the impact of a lack of credit access. Our members want policymakers to expand, not eliminate, the credit options available to them.
About Consumer Rights Coalition
The Consumer Rights Coalition (CRC) is a consumer-based organization dedicated to ensuring that Americans will continue to have access to all forms of credit. CRC's membership is made up of more than 215,000 consumers from across the nation who use a variety of retail or short-term financial products to manage their households. For more information, visit us at www.consumerrights.org.
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