PROVIDENCE, R.I. (AP) -- Payday loan businesses are fighting a legislative proposal to cap interest rates on short-term loans in Rhode Island, saying it could force them to close and deprive their customers of a useful financial tool.
A legislative committee plans to review the legislation Tuesday. The bill would cap payday loan interest at 36 percent. Now, the loans come with annualized interest rates of up to 260 percent.
The bill's sponsors, Rep. Frank Ferri and Sen. Juan Pichardo, say the loans trap low-income residents in a cycle of debt. The bill has failed in recent years after running into industry opposition.
Jamie Fulmer of Advance America says his company charges $10 for a two-week $100 loan. He says new restrictions aren't needed and may force his company to withdraw from Rhode Island.