MILWAUKEE -- With so many people strapped for cash because of the COVID-19 pandemic, some may be considering payday loans, which are short-term loans that come with exceedingly high-interest rates. Unfortunately, the Better Business Bureau (BBB) says many payday borrowers find themselves unable to repay the principal, fees and interest at the end of the loan period so they renew the loan, incurring even more fees and interest and trapping themselves into a cycle of debt.
A news release from the BBB says Wisconsin has no cap on annual interest rates for payday loans, which can be more than 500% APR. In addition, although borrowers can only renew a payday loan twice, there is no limit on the number of different payday loans a borrower can have. In the past 12 months, BBB has processed almost 2500 complaints against payday lenders nationally – 50 from Wisconsinites -- mostly from consumers complaining about high-interest rates.
Before taking on a payday loan, BBB recommends you consider these alternatives:
If you must use a payday loan, BBB has this advice: