The following is a legislative update from Senator Amanda Ragan of Mason City, who serves Butler, Cerro Gordo, and Franklin counties:
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Setting standards for fair credit and lending
Everyone needs to borrow money on occasion, whether it’s for a medical emergency, an unexpectedly high winter heating bill or day-to-day necessities. Unfortunately, not everyone has the same chance at a good deal.
Have you ever borrowed $200 or $300 at interest rates of 350 to 400 percent? You probably wouldn’t if you had better alternatives.
Lower-income Iowans are often caught in a vicious cycle of debt because of “payday lenders” who charge outrageous interest rates for loaning small amounts of money to tide over working and elderly people.
Iowa payday loan companies have made millions by targeting those who are desperate for a little extra cash, exploiting them in their time of need.
Iowa can provide fair credit services to working families. We are long overdue for reforms that many other states have already made. The Iowa Legislature can help by:
- Limiting the interest rate for payday loans to no more than 36 percent.
- Establishing new payment options to help borrowers get out of debt.
- Encouraging banks and credit unions to provide more lending options to lower-income borrowers.
