ILLINOIS (RFD) — The Better Business Bureau wants you to know the hazards of taking out a payday loan. Nationally, the agency received more than 1,000 complaints about payday lenders last year. Many complaints revolved around the loans’ high interest rates, as well as difficulty canceling a loan contract or obtaining a refund for automatic payments withdrawn in error. BBB Investigator Don O’Brien says payday lenders tend to appeal to people who may be unable to obtain a credit card or bank loan.
A common finance charge is $15 or $30 per $100 borrowed, and annual interest rates can balloon into the hundreds. These high interest rates can force these borrowers to renew the loan and pay new fees every two weeks until they can finally save enough to pay off the principal and get out of debt.