MACED Common Cents Financial Initiative

fast facts

• Ninety-one percent (91%) of all payday loans are made to borrowers with five or more payday loans per year.

• Predatory payday lending costs American consumers $3.4 billion per year in excess fees.

• Only one percent of all loans goes to one-time emergency borrowers.

• In the last decade, the number of payday lending stores in the US has grown from 300 to 15,000, generating $25 billion in loan volume.

• Each year, more than five million Americans are caught in the “debt trap” of payday lending.

common cents financial initiative

The Common Cents Financial Initiative seeks to:

• Improve the financial behavior of those making poor financial decisions.
• Provide borrowers with a reasonably priced loan alternative.
• Provide borrowers with access to a range of traditional banking and financial services.
• Promote the development of better policy that creates affordable alternatives to payday loans and restricts predatory practices.

Payday loans, or paycheck advances, are small, unsecured short-term loans (typically up to $500) that are intended to bridge the borrower’s cash flow gap between paydays. Several studies have indicated that these are not temporary hardships, but long-term and enduring problems. Financially stressed individuals turn to payday lenders as a last resort, pay high fees and often find themselves in a cycle of rollovers which results in fees that are equal to the original loan amount within three months.

To address this problem MACED developed a new loan product that is offered through participating Kentucky businesses that provides an alternative to the high cost payday loan services. Our goal is to help customers break out of the cycle of debt by offering a product that allows them to retire existing loans, access cash at lower cost where necessary, develop a stronger personal financial plan and connect them to other financial services. For more information on the Save It! loan, click here.

This effort supports MACED’s engagement in helping state decision-makers understand the negative economic impacts of current payday lending regulations and promote alternative strategies. An editorial about the payday lending dept trap written by a MACED staffer was published in the Lexington Herald-Leader. Click here to read the editorial.

Contact MACED Program Manager Larrey Riddle at 859-986-2373 or lriddle@maced.org for more information. If you are a Kentucky employer that would like to participate in the program, please click here for more information.