The Shaft: How Some Companies Prey on the Poor

Posted by on Nov 4, 2010 in Infographics

The Shaft: How Some Companies Prey on the Poor

The Mint has an infographic about payday loans, bad credit cards and rent-to-own.

Although it’s a beautiful infographic and they host a vibrant discussion in their comments section, we thought that a few of their statements could be misleading.

In particular, the part about borrowers being poor and unsophisticated, the interest rate being 30% (it’s actually a lot higher) and payday lenders being deemed loan sharks…

From their site:

“Here’s a look at a few schemes (not all strictly illegal but certainly of questionable ethics) that deliberately prey on people who are poor and unsophisticated about money.”

First off, we take issue with the terms poor and unsophisticated. According to our Demographic Study of Online Payday Loan Consumers, we found that most visitors to payday loan sites were college educated and had a household income of between $30-60k or $60-100k.

Now for the infographic…

TheShaft-5
budget planner – Mint.com

It’s a beautiful infographic. Visually appealing, stunning and gorgeous.

A few nitpicks…

The infographic states that the interest rate on the payday loan is 30%. This is misleading. If you consider it in terms of Annual Percentage Rate, it is much higher than than.

Plug the $200 loan amount, $60 fee and 15 day term into the Payday Loan Calculator and it comes out to 730% APR.

Also, it says that payday loans have been deemed loan sharking in 13 states. This is also misleading. Loan sharks and payday lenders are completely different animals.

For more information, please read Sixteen Differences Between Payday Lenders and Loan Sharks.

The above infographic mentions bad credit card companies so you may want to check out Twelve Differences Between Payday Lenders and Credit Card Companies as well.

Source Article: The Shaft: How Some Companies Prey on the Poor (External Link)

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