lenders in Rhode Island profit off the economic vulnerability of Ocean State
residents, charging fees that translate to annual interest rates of 260%. Legislation
has been introduced since 2010 to either eliminate or cap pay day loans at 36% annual
interest with no success, despite popular support. A 2012 public opinion poll
of over 500 residents showed that three quarters (76 %) of Rhode Islanders
supported capping interest rates on payday loans.
the states in the Northeast, only Maine, Delaware, and Rhode Island still allow
payday lending. Nationally, 15 states and the District of Columbia enforce laws
with rate caps of 36 percent or less to protect consumers from the predatory
lending practices of payday lenders.
data show that Rhode Island’s payday lenders set up shop in areas with
relatively high rates of poverty. In doing so, they also target neighborhoods
in which Rhode Islanders of color are concentrated.
In addition, while the economy in Rhode Island has improved over
the last nine years, the number of pay day loans in Rhode Island has grown by
almost 60%, suggesting that lenders are squeezing a higher number of loans out
of their borrowers and increasing pressure/advertising for consumers to take
According to the national Center for Responsible Lending, Rhode
Island consumers face fees of $7.6 million a year due to payday
lending, accounting for 93 percent of all payday lending fees in New England. This
is money that lower income Rhode Islanders, and Rhode Islanders of color,
cannot afford to lose.