By: Laura Freeze
Living in poverty is challenging and is often compounded during the holidays. A major cause is the proliferation of predatory payday lending, which one coalition of 40 partners, including United Way Bay Area (UWBA), is working to mitigate throughout Santa Clara county.
The Coalition Against Payday Predators (CAPP) operates during the holiday season and beyond to educate residents about the pitfalls of payday lending, while offering alternatives. CAPP encourages substitutes to payday lending, such as reconsidering spending, borrowing from a credit union, seeking assistance from nonprofit agencies, dealing with debt head-on, and proactively saving money. CAPP, and allied partners in California, also advocates for stronger consumer protections for payday loan borrowers, in addition to changing local land use policies that limit the prevalence of payday lenders.
CAPP faces an uphill battle in its efforts. According to The Pew Charitable Trusts, California has “permissive” standards for payday lending, which allows payday lending to flourish and can result in loans with an annual percentage rate (APR) of more than 391 percent. Borrowers – often low-income – can easily be entrapped into taking out loan after loan in an attempt to pay off the original loan. In California alone, payday lenders issued 12 million payday loans in 2015.
Ana Rosa Camacho, an Income Program Specialist with UWBA, works closely with CAPP and payday loan borrowers. Payday loans are “incredibly expensive for consumers,” she said. “They are designed to trap people in the cycle of debt and our main tool to fight against this is educating our community members.”
Camacho manages a hotline for those affected by payday lending and teaches financial education classes with an emphasis on educating Santa Clara County residents about the harm of predatory payday lending. The classes also include segments covering banking, savings, and building credit. In 2016 alone, 725 community members have participated in 48 classes.
Partner organizations in the fight against payday lending, such as work2future Foundation in San Jose, confirm the relevance of classes and resources provided through CAPP. Alex Ontiveros with work2future Foundation indicates the anti-payday lending workshops “…present the topic in a very real and relatable way. Because of this approach, expertise, and genuine desire to help our program participants, they are truly engaged.”
This month, ensure that you and others in your family and community can celebrate the holidays without fear of being caught up in payday lending. The following organizations also offer a wealth of information about payday lending resources and policy developments: