The patron leaving ACE Cash Express on South Cooper Street doesn’t want to be identified, but he’s otherwise comfortable discussing the fact that he’s just borrowed $300 that he expects to pay back next paycheck. About 60 percent of local paycheck lenders — they prefer to be called consumer-service or credit service organizations — are members of a national organization called Community Service Financial Services of America. The fees may seem relatively small for a week or two — typically $15 to $20 for each $100 borrowed — but calculated annually, they are equivalent to 300 percent to 700 percent, or even more. An Arkansas study indicated that 99 percent of clients are repeat borrowers; a Consumer Research Foundation study calculates that 1 in 20 adult residents has already had a payday loan. The Center for Responsible Lending calculates that on average such businesses enjoy a profit margin of 34 percent, though it’s difficult to tell because many such businesses are not publicly traded. read more

Filed in: Cash Day Advance