Serving Bread

A friend recently reminded me of an off-hand comment I made about pay day loan centers. While teaching a personal finance seminar for seniors, I mentioned how these types of businesses will have a special place in hell. I recognize I used some extreme language, but it’s heart-breaking to know how pay day loan centers or check cashing centers usually take advantage of the poor who have little financial education and/or are unable to seek better options in their finances.

The politically correct term for these types of businesses is that they are a part of the “fringe economy.” Here’s a description of the fringe economy (from my friend):

The term “fringe economy” refers to a range of businesses that engage in financially predatory relationships with lowincome or heavily indebted consumers by charging excessive interest rates, superhigh fees, or exorbitant prices for goods or services. Some examples of fringe economy businesses include payday lenders, pawnshops, check-cashers, tax refund lenders, rent-to-own stores, and “buy-here/pay-here” used car lots. The fringe economy also includes credit card companies that charge excessive late payment or over-the-creditlimit penalties; cell phone providers that force less creditworthy customers into expensive prepaid plans; and subprime mortgage lenders that gouge prospective homeowners.

I came across “Pay Day Loans Have Equally Bad Friends” at Bargaineering.com that speaks of others that make up the fringe economy.

Personal finance is an important part of mentoring young students. And especially when I have seen students and theri families suffer from poor financial decisions and who have been a part of the fringe economy, this economy has become more personal than just an evil that I simply think exists among us.