Why I’m Thanking Google and the CFPB
May 20, 2016It’s a regular part of my day to talk to people who are struggling with debt. Some people facing what they consider a crisis level of debt will occasionally make a hasty decision, one that they find helpful in the moment but later regret, and take out a short term loan. These “payday loans” are available to borrowers with less than stellar credit scores and are readily available in nearly every community in the country, but they are often pretty terrible financial tools. The interest rates, when looked at as an annualized rate (because rarely are they paid off in the required time, so they continually roll over into new short term loans with the interest continuing to accrue at a high rate), rank up there with the loan sharks in old gangster movies. As a result, the Consumer Financial Protection Bureau is working toward getting this payday loan industry regulated and reigned in a bit.
It was refreshing for me to read this article about Google banning payday loan ads on their search engine. The last few people I talked to who had payday loans found their payday lender online after searching for ways to get out of debt. If they used Google to search for ways to reduce/eliminate debt on a semi-frequent basis, payday lenders could show up on their computer screen and look like a way to reduce a short term pressure. Sure, it adds longer term pressure but in that moment of temporary weakness, the short term pressure release seems like a perfectly rational idea. Now, people who search for short term loans or ways to get out of debt will not see payday lenders showing up on their laptop with the promise of solving a problem (by creating a bigger one!).
I’m pleased with Google’s new approach to payday lending, and I’d love to see that industry shrink as more and more people learn more about how to manage their personal financial lives and master the basics. The “basics” as I see it are: spend less than you make, save a portion of each paycheck, build a comfortable reserve fund and avoid high interest debt. Those who do that will be able to avoid the perils associated with these loans.
For anyone considering a payday loan…DON’T! We’d be more than happy to help you consider other alternatives. Ask us a question on our Facebook page, send us a Tweet or mail us a letter with your situation and we’d be more than happy to help you find a better alternatives. The CFPB and Google are taking action on an issue that we have been helping people address for many years, and I, for one, am happy to see the progress.