Taking action to limit the impact of short-term loans, like payday loans, is being considered by the U.S. Consumer Financial Protection Bureau in an effort to protect consumers against loans that can become “debt traps,” according to its director recently.
Payday loans are being addressed by the agency to protect consumers by the potential abuses they can cause. The action to protect consumers from “debt traps” is being analyzed in addition to the need to preserve access for those with responsible credit because there’s a clear demand for short-term loan products. However, certain users of this type of loan can actually get hooked when they want to cover old loans by taking out new ones.
Depending on the terms and conditions of the short-term loans, it can harm consumers rather help them.
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