Why the Poor Pay More

How to Stop Predatory Lending

People are getting into the debt at an alarming rate in the United States. While pundits have often blamed this on the American lack of frugality and financial responsibility, a group of economist are pointing their fingers to another culprit-the predatory lending institutions.

By definition, predatory lending is when credit is extended to those who do not deserve credit. These include the low income, the uneducated and the financially illiterate in general. These people are in turn charged exorbitant interest rates due to the extra risks that financial institutions have to bear with regards to these credits.

What results are chronic poverty and widening income gaps. The poor are perpetually trapped in a cycle of debt while the rich enjoy lower rates on credit which far better terms.

The book is a series of essays that documents several studies on the subject. Most have suggested viable solutions but it remains to be seen if the measures will be implemented in the near future.