One week ago on Election Day, South Dakota voters overwhelmingly approved, by a 3-1 margin, a ballot initiative to cap interest rates on payday loans.
Voters had two payday lending ballot initiatives to consider, these included:
- Measure 21—a measure to cap payday loan interest rates at 36 percent.
- Measure U—a measure designed to confuse voters by framing it as an 18 percent cap, unless the borrower agrees to a higher interest rate in writing by signing a waiver.
Prior to Measure 21, South Dakotans were charged, on average, 574 percent for payday loans. They will now join the ranks of states like Colorado by capping interest rates at 36 percent.
Nebraska borrowers will continue to pay more for payday loans than any of our neighboring states. Under current Nebraska law, borrowers are paying an average interest rate of 461 percent. These high cost, short-term, lump-sum repayment loans force the typical borrower—a woman, age 25 to 44, with annual income less than $50,000—into a cycle of debt. Unable to make the lump-sum loan payment, and pay for groceries, gas, rent, and utilities, the typical borrower must take out another loan—and then another and another, making it increasingly difficult for her to dig out of the high-priced debt. Nationally, an average borrower pays $520 in fees to carry or rollover a $375 loan for six months.
The Women’s Fund of Omaha is working with a broad-based, statewide coalition to pursue legislation that will not only cap payday loan interest rates in Nebraska at 36 percent, but will also extend the length of the loans, and place a limit on the percentage of income required for repayment terms.
We are excited to push this legislation forward! We need your voice to help us pass legislation that will make loans more affordable and workable for Nebraskans. To get engaged in our policy efforts, please reach out to: