1. SMALL LOANS, BIG DEBT The Cost of Pay Day Lending Illinois People’s Action www.illinoispeoplesaction.org

2. How does it work?

3. Comparing Quick Cash Options What does $500 cost after 2 months? Type Loan Interest Rate Interest after 2 months Payment due after 2 mo. Credit Union or Bank Loan 18%$11$511 Credit Card Advance 28%$18$518 Pay Day Loan 390%$300$800

4. How a $350 payday loan affects a household budget $35,000 Salary 2 week income$1,346 Minus taxes$105 After tax income$1,241 Payday loan plus “fees” $403 ($350 loan + $53 fee) Money left over$838 2 weeks household expenses $895 Deficit$(57)

5. Who uses payday loans?

8. If it’s good enough for the military…

9. 2010 Payday reform bill Signed June 21, 2010; goes into effect April 2011 Caps interest rates at 400% for payday loans ($15.50 per $100) Requires determination of customer’s ability to repay Limits customers to 4 loans/year Can’t penalize customers for paying off loans early. Can’t require large lump-sum “balloon” payment at the end of the payment cycle.

10. Where does it miss the mark?

11. Unfinished business

12. Next Steps IPA’s Municipal and Statewide Campaign