(WORT)–Official numbers show the U.S. economy is continuing to recover after the 2008 financial collapse. But it doesn’t feel that way for many poor and working class Americans.
According to several national surveys, roughly half of the U.S. population would not be able to come up with $400 for an unexpected expense without selling something or borrowing money.
In these kinds of situations, many turn to payday loans. Every year 12 million Americans borrow a total of $50 billion from payday lenders. Many end up trapped in a cycle of debt that is difficult to escape.
A federal watch-dog agency proposed a new measure Thursday to rein in predatory payday lending. The Consumer Financial Protection Bureau rule would require lenders to screen potential borrowers for their ability to pay back the total loan amount without having to borrow more money within a month’s time.
What will the rule mean for Wisconsinites? And could the “full payment” test leave millions without a place to turn for credit in a pinch?