LETTER TO THE EDITOR: A Faithful Response to Payday Loans


Payday loans are small dollar loans that become due on the borrower’s next payday. In Minnesota, the Minnesota Department of Commerce 2020 report showed the average payday loan size is $ 380 and the cost of borrowing that amount for two weeks is a staggering 273% APR.

There were 4,109 payday loans in Beltrami County averaging $ 311 and averaging 202% annual interest.

This exorbitant interest rate could be overlooked when borrowers take out a loan, climb out of debt and walk away satisfied. But that’s not the reality surrounding this predatory loan product.

MDC data shows that the typical payday loan borrower takes out an average of 10 loans per year and is in debt at triple digit APR for 20 weeks or more. For the $ 380 loan mentioned above, that translates to $ 397.90 in fees plus the principal – nearly $ 800 when all is said and done.

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The practices of most contemporary payday lenders are very similar to those condemned in the sacred texts and teachings of Judaism, Islam, and Christianity.

The Bible says: “If you lend money to one of my people among you who is in need, do not treat it like business; do not charge interest ”(Exodus 22:25).

The Qur’an takes a principled stance against predatory lending – according to Allah, it is sinful to charge interest at all, as it is the responsibility of finance professionals to get people out of debt as quickly as possible instead of deepening and increasing their debts benefit (Sura 2: 275-281).

In the Compendium of the Social Doctrine of the Church, the Catholic Church teaches that “usury is a scourge that is also a reality in our time and has a stranglehold on the lives of many people” – and Pope Francis recently spoke out against payday lending.

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