NEWARK, OH — Payday lenders across Ohio intend to shut their operations and lay off thousands of employees after Gov. Ted Strickland on Monday signed tough new lending restrictions into law.
When the law takes effect in 90 days, lenders will not be allowed to charge an interest rate of more than 28 percent. At a fee of $15 per $100 on a two-week loan, payday lenders currently charge a 391 percent annualized interest rate.
More than 1,600 payday lending stores are expected to close by the end of August, vacating millions of square feet of office space and laying off 6,000 workers.
Heartland Cash Advance in Newark is one of those stores.
Kelly Covert left a career in the food and beverage industry six months ago to work at Heartland, but she expect to lose her job soon.
"I'm the one who changed careers to come to this," Covert said. "Now the rug has been pulled out from under me."
Jennifer Felumee, who works with Covert at Heartland, is also angry that the state has changed lending rules.
"I'm very upset about it because I don't feel like I have a future," Felumee said. "I have kids at home to support. I can't make it on unemployment."
Both women blame politicians, who they say mistakenly accused the industry of preying on customers by giving them high-interest rate loans that kept them in a cycle of debt. The women said payday lenders were providing a short-term solution to people facing unexpected expenses.
"A lot of people have a hard time saving," Felumee said. "It's payday to payday for most of these people in the world. It's just the way it is."
Employees of payday lenders about to lose their jobs will soon join their customers in facing financial hardship.
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