As many as 14 states in the country and also the District of Columbia have prohibited payday lending. These states have passed legislation imposing tough terms and limits on payday lending. The US federal government has stepped in too. The Consumer Financial Protection Bureau (CFPB) has proposed regulations in June 2016. These regulations are going to come into practice from 2018.
However, the ground reality is that, there are few options for people who actually need the money.
Reality in the Mississippi Delta
If you travel through Highway 61, you will come across small towns and the fertile farmlands of the Mississippi Delta. There are many fast-food joints, gas stations, discount malls, and several stores that offer quick cash. There’s almost a constant flow of people coming and going to these stores, trying to get cash, and keeping up with the repayments. Most of them won’t get the money they need from a regular bank.
In Clarksdale, for instance, a majority black-town, one in three live in poverty, and this is the only kind of banking available. But payday lending isn’t just restricted to black Americans. You will see plenty of whites, Asians, and Hispanics too across the country. Most of them come from middle to lower-middle class neighborhoods.