Help Others Avoid Predatory Lending
By Patrick Winn
Through 2017, Catholic Charities has focused on the “advocating for justice” part of our mission statement. We have been highlighting (lowlighting?) the injustices of human trafficking across northern Illinois and partnering to bring access to better basic health care at St. Elizabeth Catholic Community Center. 
We support vulnerable individuals at both ends of the life spectrum by focusing on adoptions and advocating for seniors. Our support of refugees from oppressive regimes has resulted in gainful employment. We guide teen moms and dads to quickly and effectively learn how to become responsible parents.
But there are quiet injustices also needing attention. 
At last count there were more than 30 “pay day” or title loan companies within 10 miles of the Diocesan Administration Center. (On-line predatory lenders are even closer.) According to a recent study approximately 
10 million to 12 million people regularly depend on payday loans. Debt is often racked up during the Christmas season as people give all they can to their children. Unlike the gift that keeps on giving, debt becomes a burden that keeps on taking. 
Payday loans and payday installment loans must usually be repaid from a person’s wages within two weeks to six months. Given the short term nature of the loan, the effective interest can actually reach 300 percent per annum. This makes a small consumer loan rate of 99 percent look almost reasonable. 
The subtle injustice of this is the target audience, namely the working poor whose definition has evolved as economies change. Odds are a carpenter from Nazareth with a pregnant wife and no place to stay for their Son’s birth would have met the definition of the working poor 2,000 years ago.
Although most states now provide some measure of protection against usury, the working poor are still the most frequent target of oppressive interest loans that people in the middle class can avoid. The vicious cycle of high-interest borrowing nearly guarantees further financial exploitation and lasting poverty.
There are options available to those needing short-term credit. But since most traditional lending arrangements are unavailable to the working poor, individuals must approach friends, families and institutions such as credit unions or subprime credit card issuers. If credit union membership is not available, or an up-front deposit is impossible for a secured credit card, the rates charged at pay day facilities can be crushing for minimum wage earners. Christmas should not lead to unsustainable debt undertaken to impress ourselves or others with our benevolence. 
We should not belittle those who fit the definition of the working poor. Since no king is likely to deliver a gift of Christmas gold at January 2018’s Epiphany, let us instead humbly offer a generous measure of respect when giving and receiving, remembering the Holy Family’s circumstances on the first Christmas. Our days will indeed be merry and bright. 
Merry Christmas from your Catholic Charities.