In Virginia, the State Now Offers Payday Loans

Have you ever taken out a payday loan? These loans are famous in working-class and minority neighborhoods and can add up to as much as 400% annual interest! In Virginia, the state is trying out a new program that offers cash-strapped workers a way to avoid the trap of these predatory loans.

In a story in the Wall St. Journal, I learned that the state of Virginia will now offer between $100 and $500 to state employees, at an annual rate of 24.9 % interest. They have to join a credit union and the money is debited from their paychecks over six month period. Already more than 2700 employees have taken the state up on its offer.

Despite the healthy bottom lines of the many payday loan companies who have sprang up during our hard times, the story argues that offering these stopgap types of loans is essential to help the public avoid diving into the well of debt.