Editorial Board
The CFPB Gets Its Payday-Lending Rule Right
The regulator has listened to complaints and come up with a better approach.
Getting along until payday can be expensive.
Photographer: Gary Tramontina/Bloomberg via Getty ImagesPayday lending has long done more harm than good to many cash-strapped Americans. At its second attempt, the Consumer Financial Protection Bureau has come up with a good way to reduce the damage.
Payday lenders provide a service that all too many U.S. consumers sometimes need -- small loans, usually of $500 or less, to help them get by until their next paycheck. But the money typically comes with a catch: Pay it all back in a couple weeks, or roll the debt over at interest rates that can exceed 400 percent. Many get trapped in loan after loan; in the end, some pay multiples of what they first borrowed -- not to mention the occasional harassment and unauthorized charges.