Small payday loans are touted as quick, short-term access to money, but people like Elliott Clark of Kansas City, Missouri, call them "debt traps."
A retired and disabled Marine, Clark still has a hard time talking about the more than 5 years in which he says he struggled to pay $50,000 in interest which began with $2,500 of these loans, sometimes called "cash advances" or "check loans."
"It was hard for me to talk about it without breaking down in tears," Clark told ABC News. "If you're a man you take care of your family. If I had another choice, I would have taken it. I wouldn't have gotten in that situation at that time."
Clark's road to the payday loans began in 2003, when his wife slipped on ice and broke her ankle, which required surgery to restructure it. His wife, a retail employee, was unable to work for several months, Clark said, and was ineligible for benefits from her employer. With two daughters to help support through college, Clark couldn't pay his wife's medical bills, which he said totaled $26,000. He turned to his family and friends, but they didn't have the money to lend him.
"I tried banks and credit unions. My credit was 'fair,' but it wasn't enough to get a large sum of money to pay the money," he said, noting his credit score of 610. A credit score of more than 750 is typically described as "excellent."
Clark said he eventually took out five $500 loans from local storefront lenders, and he paid interest every two weeks. Every two weeks, $475 in interest was due ($95 from each loan) and he would often take out new loans to cover the old ones.