John Oliver–the muckraking journalistic superhero disguised as a comedian on HBO–does not think “payday loans” are a good idea. Student loans are one thing–and the endless public debate about whether going into $100,000 debt to read Shakespeare and Wittgenstein will continue unabated. But payday loans–the kind that appeal directly to people already in dire financial straits–are what Oliver is trying to warn about.
One in 20 families has taken out a payday loan–and not just from Montel Williams. It’s a $9 billion industry and it’s designed to keep people in an endless cycle of uninterrupted debt servitude. It’s only a 20-year old industry and it’s feeding on American citizens in trouble while pretending to offer help. If someone offers to give you $1000 until next payday, you might be paying what amounts to 1900% interest a year. It’s short term cash and it’s not the worst thing if you pay it back right then. But if you don’t, the penalties begin and interest rates start their crushing punishment. You automatically get another high interest loan to pay off the one you just took–and on and on. One predatory loan can have a half-life of many years. Listen to John Oliver.