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Milwaukee—A new study shows that people in Wisconsin are paying some of the highest rates in the nation for payday loans.

There are payday loan companies all over the country. About 23,000 of these lenders are currently open. That’s almost double the amount McDonald’s open across the nation.

A man we spoke to in Milwaukee, who used only his first name, Trey, said he prefers using this type of business over banks. Although he gets no credit from them.

Nati Harnik/AP

An unidentified person exits the storefront of EZ Money Check Cashing in Omaha, Neb. in this Friday, February 17, 2017 photo. (AP Photo/Nati Harnik)

“Banks want answers. They don’t want answers. They give you what you ask for,” Trey said.

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Trey, who didn’t give his last name, says he uses check cashing shops regularly because he doesn’t like dealing with banks.

Another man we spoke to who didn’t want to go on camera said he got a payday loan and he’d never get another one because the interest rates were outrageous.

Wisconsin does not limit the amount of interest a payday lender can charge.

Only these 18 states limit payday loans to an interest rate of 36 percent or less:
Arkansas
Arizona
Colorado
Connecticut
Georgia
Hawaii
Maryland
Massachusetts
Montana
Nebraska
New Hampshire
New Jersey
new York
North Carolina
Pennsylvania
South Dakota
Vermont
West Virginia
Washington, D.C

In Wisconsin, the average person borrowing money in a payday loan deal typically pays hundreds of dollars in fees.

Pew Charities If someone borrows $500 from a payday lender, the average cost of borrowing that money is $395 in fees. That’s an interest rate of 338 percent. The average credit card interest rate is 16 percent.

Additionally, one in four people typically re-borrows at least nine times on the same payday loan, according to the Consumer Financial Protection Bureau.

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Administrative Department of Wisconsin

“It’s still at such an exorbitant level that you’re taking on follow-up loans and you’re really making it through this cycle. This debt trap that people never get out of is just predatory lending, plain and simple,” Republican State Senator Andre Jacque said.

He introduced an invoice this year to limit the amount of interest payday lenders could charge at 36 percent. But this bill fell through before the end of the session.

One of the groups working towards this against limits for payday lenders is the Wisconsin Bankers Association. The association president and managing director Rose Oswald Poels says they are against any kind of interest rate cap. Even if they say they want more regulation for the industry as a whole.

state capital

UniversalImagesGroup

State Capitol, Madison, Wisconsin. (Photo by: Universal Images Group via Getty Images)

“We just don’t want to cap interest rates on loans. I don’t think it’s in anyone’s best interest to arbitrarily set the interest rates on the loan,” Poels said.

Jacques says if banks and credit unions can be regulated, then why can’t the payday loan?

“A lot of people have been harmed by predatory lending and I think this is an easy way to make sure it doesn’t affect more of our citizens,” Jacque said.

He plans to reintroduce legislation next year to regulate payday lenders. In the meantime, he encourages people who need a quick loan to check with a bank or credit union first and find out about the fees you might pay if you get a short-term loan.

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