The House Judiciary Committee heard testimony on House Bill 1351 which this fall seeks to send to the ballot a question of whether payday loan stores should be able to charge more than 36 percent interest to customers.
Earlier this month, the Colorado Attorney General's office released a report showing that last year, the average payday loan customer paid $475 in fees to borrow $367. It estimated 300,000 Coloradoans used payday loans in 2009.
Kasie Oliver took out a $400 payday loan to help cover extra bills incurred when her grandkids came to live with her. Eight months and 300 percent interest later, she filed for bankruptcy.
"It was horrible, it was horrible," Oliver said before telling her story to lawmakers. "300 percent - it's robbing, it's stealing. It's not the right thing to do."
At a lunchtime rally, more than 300 people defended the industry saying it provides a valuable service to a community that needs it. Industry executives say there are 1,600 full-time payday loan workers in Colorado and that the proposed cap would serve as a dramatic cut to their revenue.
"The fact is, we offer a service that's easy to understand and when used correctly gives hard working people the cushion for tight financial situations," Deisi Pinedo, who is a district manager for Advance America, said. "The truth is our customers know what it costs to borrow money and compared to the fees associated with bouncing a check, paying a credit card bill late and even with many ATM charges, it costs less to get a payday loan."
Pinedo said other states that have implemented similar interest rate caps have seen stores close, jobs lost and important credit opportunities disappear. Currently, 16 other states and the District of Columbia have passed legislation regulating the amount of interest the industry can charge. An earlier plan that sought to cap the interest rates failed at the State Capitol two years ago.
Fore more information on House Bill 1351, visit http://www.leg.state.co.us/CLICS/CLICS2010A/csl.nsf/fsbillcont3/041577DBD253C4C9872576D20063325F?Open&file=1351_01.pdf.
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