Think your relatively poor or ordinary congregation can’t make a difference? Think again.
Meet the congregation of Jeff Street Baptist in Louisville, Ky., featured in the January 2013 magazine article “Multiplying Loaves,” by Beth Newberry. Not only has this modest church raised $180,000 to provide micro loans to people around the world, but members are also lobbying for payday lending reform nationwide and taking on the payday lenders in their local community.
According to the Center for Responsible Lending (CRL), from California to North Carolina payday lenders disproportionately target and exploit African-American and Latino communities. Through loans with interest rates of more than 400 percent, payday lenders often trap borrowers in a cycle of debt.
Payday lenders claim their loans are short-term and for emergency use, but most borrowers cannot afford to pay back their loan plus the charges when the high-interest loan becomes due in two weeks. Borrowers then end up taking out repeated loans, paying an additional fee each time.
To put that in perspective, at the end of eight back-to-back loans, a typical $325 loan would have accumulated $468 in interest, according to a CRL study. The borrower would have to pay $793 to retire their $325 payday loan.