Payday Lending

On June 27, 2007 the Ohio Bishops went on record as supporting initiatives that protect the working poor and all Ohio consumers from the spiraling indebtedness caused by payday lending, and directed the Catholic Conference of Ohio’s Department on Social Concerns to study and recommend ways our church communities can help in the promotion of alternative lending programs, such as credit unions and small loans, as well as the creation and promotion of financial awareness education programs.

Payday Lending is one of the fastest growing industries in Ohio. In a payday advance loan a borrower writes a check (up to $800) dated for two weeks later. The money is advanced for a fee ( typically $15 per $100 borrowed) If the borrower is unable to pay back this loan within the two weeks, the loan is often extended or money re-borrowed for additional fees.

Concerns have been raised as to whether there are sufficient safeguards and legal protections to mitigate against low income persons becoming trapped in a debt cycle of repeat borrowing and high borrowing fees.

The Community Financial Services Association of America, an association of payday lenders, believe they are striving to be responsible lenders. Best Practices Pledge.

The Center For Responsible Lending, a nonprofit, nonpartisan research and policy organization, believes too many practices result in keeping borrowers in debt.

In Ohio, the Ohio Coalition for Responsible Lending, a growing coalition of concerned individuals, civic representatives, faith communities, low income advocacy organizations, and legal associates has formed to help assure responsible practices and legal protections within this type of lending.

Educational Resources

Catholic Conference of Ohio's Statement of Concerns regarding Payday Lending, February 2008

Catholic Conference of Ohio Sign-On Statement of Concern, February 2008

Catholic Conference of Ohio Background Report on Payday Lending, June 27, 2007

Ohio Legislative Resources/Actions

On June 2, 2008 the Governor signed into law HB 545 proposed by Representative Chris Widener. This was a compromise bill creating a new short term lender law. It added many consumer protections, including capping annual interest rates at 28%.

Payday Lenders are in the process of gathering signatures for the November 2008 Ballot in an effort to repeal this legislation.

Federal Legislation

U.S. Congress enacts legislation restricting payday interest rates (capped at 36 %) to military personnel. Effective date is October 2007. CLICK HERE

Need More Information

Contact Tom Allio, 1-330-535-2787