Nursing Home Payday Lending
Posted by PKSD Law Firm on August 28, 2009 in Nursing Homes and Elder Rights
Nursing homes should not be in the business of making high-interest loans to their workers. But in Missouri, more than 90 of them are.They routinely charge annual interest rates exceeding 300 percent. In one case, workers are charged a jaw-dropping 912.5 percent.
That is absurdly high, but not as high as it could be. Missouri law allows payday loan companies to charge fees and interest of as much as 75 percent of the original loan amount 1,950 percent on a two-week loan. That is the highest allowable rate in any of the 43 states that have capped payday lending interest rates or banned payday lending entirely.
With rates like that, workers would be better off taking high-interest cash advances from credit cards. But economists have found that many payday loan borrowers dont fully appreciate just how much they are paying.
Here is the best part, at least for nursing home owners: Payments are deducted directly from workers paychecks. That makes borrowing easier and repayment all but certain. Nursing home payday loans are anything but rare. Officials at one nursing home with 100 employees told the Better Business Bureau that they make 12 to 15 loans per day; another with 63 workers makes eight or nine loans a day.
Three years ago, then-Gov. Matt Blunt vowed to shut down payday loan operations in Missouri nursing homes. Employers should not be making a profit off the wages they pay their hard-working long-term care facility employees, he said.
At the time, 74 nursing homes were loaning money to their workers. Today, the Better Business Bureau says at least 90 offer the loans.
Source: St. Louis Today (21 August 2009)