Payday loans are small amount loans that mature on a borrower’s next payday. In Blue Earth County, the average payday loan size in 2021 was $355, and the cost of borrowing that amount for two weeks was compounded at a staggering 294% APR.
That exorbitant interest rate could be overlooked when borrowers take out a loan, get out of debt, and walk out happy. But that’s not the reality surrounding this predatory lending product.
Data from the Minnesota Department of Commerce shows that the typical payday loan borrower in Blue Earth County takes out an average of 14 loans a year and is trapped in a vicious and never-ending cycle.
I am strongly opposed to these practices that exploit people’s financial problems for profit. This year my congregation, the First Presbyterian Church of Mankato, made a commitment to be a recognized fair lending organization for Minnesotans.
This organizing group is attempting to pass an ordinance at the city level in Mankato that would prevent the debt trap by mimicking an ordinance passed unanimously in Moorhead in 2020. Our community is passionate about social justice and advocacy, and we believe supporting this cause is another way for us to put faith into action.
We as a city have the power to create a more economically equitable community and to regulate these loans based on our values. I encourage you to reach out to the Mankato City Council to learn more about this issue that is impacting the lives of so many of our neighbors!