The already astronomical interest rates for payday loans in Utah are rising, to an average of 528 percent, with the highest rate topping a stunning 1,500 percent. Still, 1 of every 5 payday loan stores in the state closed in the past two years.
That’s according to new annual data compiled by the state about the industry — portrayed by critics as a “debt trap” that can easily hook and financially drain the poor, but defended by lenders as a needed service for people with poor credit and few other loan options.
The annual report by the Utah Department of Financial Institutions also has encouraging news about payday loan customers: They are borrowing less, and 1 in 8 now take advantage of state-mandated programs that allow them to enter into interest-free, extended-payment programs to avoid default.