Even after the presents have been unwrapped and the festive candles put away, many Kentucky families will be paying for Christmas for months into the New Year.
Those who took out payday loans, paying fees that could equal nearly 400 percent annualized interest, will be paying dearly.
We are deeply troubled by the exorbitant and unconscionable interest rates charged by payday lenders and the economic and personal distress this causes individuals and families.
In addition. it concerns us that our commonwealth continues to permit this practice that runs counter to simple morality and collective good judgment.
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As pastors, we know many people who struggled their way through the holidays. On top of gifts, if there were any, there were heating bills to pay, rent due and food to put on the table. Payday loans offer a short-term fix while saddling households with long-term debt.
Based on data collected from the state's Department of Financial Institutions database, the typical Kentucky payday borrower is indebted for 160 days a year and pays $529 in fees alone for $317 of credit.
These loans are predatory in nature. Lenders target low-wage earners, seniors and other vulnerable citizens. Because of their short-term due date and high fees, it is nearly impossible to repay a payday loan in time.
Instead, people find themselves still short of cash and forced to go back for another loan. We see this unending cycle persist despite other legal attempts at restrictions. The database provides strong evidence of this.
Common sense tells us that paying interest hand over fist is bad for families and bad for the economy when families can't pay for things they really need: a new pair of boots, gas so that they can drive to work, medication, etc.
Our religious heritage tells us that laying a debt trap is blatantly immoral. The Bible has spoken clearly about lending, warning against interest charged to the poorest.
Throughout its history, the church has opposed usury and usurers who, in the words of Martin Luther, "oppress the poor and deprive them of their daily bread."
Since our nation's founding, state usury laws have guarded citizens against unconscionable interest rates. But in recent years, our legislators have set aside the lessons of morality, history and common sense, allowing an immoral product to grow and flourish in our state.
Seventeen states and the District of Columbia have either never allowed payday lending or have limited interest to about 36 percent. Federal law protects military families with a 36 percent rate cap as well.
Let's resolve to offer this guarantee to Kentucky families before next Christmastime. Let's make 2012 the year that Kentuckians abolish the payday debt trap.