Payday Loans and Usury
A report out today from R3 finds that millions of Britons take out high-interest payday loans. These loans, if paid back on pay day, usually charge a low interest rate, but if they are not paid back, the interest rate can go as high as 4,000%!
In the past, usury laws existed to prevent lenders charging high interest rates. This was largely based on the Old Testament, where the justification for usury laws was the protection of the poor and vulnerable. Do we need to revisit such laws? Or maybe we need to rethink our whole attitude as a society to material things, consumer goods, and debt. After all, easy access to credit was at the root of the housing bubble and subsequent financial crisis.