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“Small loan” bill would mean big debts for Oklahoma families

For many Oklahomans in a financial trouble, payday loans can seem like a quick and easy fix. Borrowers can take out a payday loan for up to $500, secured by a post-dated check, usually for a period of 12 to 14 days. Under Oklahoma’s deferred deposit lending act, payday lenders can charge $45 in fees for a $300 loan, which amounts to an APR (annual percentage rate) of 391 percent.

While some borrowers turn to payday loans for an emergency car repair or other one-time needs, the industry’s successful business model is built on repeated borrowing by customers facing chronic financial difficulties. Data from Oklahoma’s payday loan database revealed that a majority of all loans went to borrowers who took out twelve or more loans over the course of a year — or an average of more than one loan a month.1 Fifty-three percent of all borrowers took out seven or more loans in a year, compared to just 28 percent who took out three loans or less. The average customer who comes up chronically short of being able to pay their monthly bills paid $324 in fees to payday lenders in 2014.

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In Oklahoma, avoiding credit card debt can hike your insurance premiums

by | November 17th, 2016 | Posted in Financial Security | Comments (2)

On October 18 at the Oklahoma Capitol, Stillwater resident Jack Bays spoke to a conference room filled with legislators, lobbyists, and insurance professionals. It was his first time in front of a legislative committee, and quite possibly his first time in the Capitol, but he spoke with confidence as he proudly declared his status as a Vietnam veteran. Mr. Bays told the crowd that he was not a man in a suit, paid to be in the room to push an agenda. He said he was at the podium as a last resort. He described seeing his auto insurance rate increase every year even though his driving record remained clean. For a long time he didn’t know why, until he discovered that insurance companies were hiking his rates due to his credit score — which was low because he had no credit cards and no debt.

At this interim study, the Oklahoma Legislature took the first step in addressing this issue. Legislators heard testimony from Jack Bays as well as experts in the insurance industry and leading advocates for consumer protection. Chuck Bell from Consumers Union highlighted key issues that were uncovered in a recent study performed by Consumer Reports using over 2 billion quotes from 700 companies in all 50 states. This research found that in Oklahoma, good drivers with bad credit were paying up to 30 percent more than bad drivers with good credit.

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America’s racial wealth gap was 397 years in the making; we shouldn’t take that long to close it

man jumping across gapChattel slavery of African-Americans lasted for 246 years, from when the first slaves were brought to Virginia in 1619 to when it was finally abolished in 1865. Another 99 years passed until the 1964 Civil Rights Act ended Jim Crow laws that had systematically denied equal opportunity to African-Americans. Even after the end of Jim Crow, discrimination against African-Americans has continued in numerous well-documented ways, and all people of color in the United States continue to lag well behind whites when it comes to income and wealth.

The impact of this history is very much with us today. As a recent report from the Corporation for Enterprise Development (CFED) points out, if the wealth of average Black families continues to grow at the same pace as it is growing today, it will take 228 years to reach the wealth of average White families today — nearly as long as the 246-year span of slavery. And that’s just to reach the current wealth levels of White families, not to catch up with White family wealth that is still growing at three times the rate of the Black population. For the average Latino family, it would take 84 years to reach the amount of wealth that White families have today.

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How new federal rules can keep Oklahomans out of debt traps

by | August 8th, 2016 | Posted in Financial Security | Comments (0)

GET CASH NOW! A neon green sign boasts a quick fix for your financial woes as you count out the few dollars you have to pay bills and buy groceries for your children. Although you are employed, this has been a particularly hard month. The payday loan, so named because you usually have to pay the loan back by your next payday, could be the solution to your problems — or it could be a debt trap.

For most borrowers it ends up being a debt trap. Borrowers start with one loan, but they often cannot afford to pay it back by their next payday. The lender then gives the option to take out another loan to cover the cost of the original loan. These “churned loans” are the hallmark of the predatory payday lending industry. Borrowers who fall into the trap end up going deeper and deeper into debt with numerous small, consecutive, short-term loans at an average APR of nearly 400 percent. 

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Highs and lows of Oklahoma’s 2016 legislative session

The 2016 session began with some high hopes and grave concerns given the state’s massive budget shortfall. Prior to session, OK Policy laid out our top priorities in the areas of budget and taxes, health care, education, criminal justice, economic opportunity, and voting and elections. A few of our priorities met with success, many did not, and there were more than a few surprises along the way.  Here’s our staff’s recap of the major highs and lows of the 2016 session in the issue areas in which we were most deeply engaged.

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New budget plans would go after low-income parents to fix state’s revenue problems

stressed out momOklahoma’s massive budget shortfall means that lawmakers face stark choices this year. They can choose devastating cuts to Oklahoma public schools, health care, and other essential services. Or they can shore up the state’s finances and invest in a stronger economy and brighter future for Oklahoma.

The second course is the most reasonable, but to save our most important public investments, the money will have to come from somewhere. Oklahoma has numerous good revenue options to fill the hole, like stopping this year’s tax cut for top earners or reining in tax breaks for businesses and special interests. Unfortunately, state leaders have decided to target a very different kind of tax program. They are threatening our state’s most important broad-based tax credits for families that work hard for low pay.

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Worker benefit denials are keeping Oklahoma’s unemployment rate artificially low (Guest post: Jimmy Curry)

by | April 19th, 2016 | Posted in Economy, Financial Security | Comments (2)

Jimmy Curry is President of the Oklahoma AFL-CIO (

Denied Concept with Word on Folder.Believe it or not, sometimes the State of Oklahoma gets it right.  The Oklahoma Unemployment Insurance Trust Fund is one of the healthiest funds in the Country with over $1 billion in it. This didn’t happen by accident. Many years ago the Oklahoma Legislature developed a formula that would raise employers’ unemployment insurance rate and lower the unemployed workers’ weekly benefit if the Trust Fund’s monies were low.  The opposite is true when the trust fund monies were high — employers’ unemployment insurance rate would drop and unemployed workers’ weekly benefit would increase.

This formula has worked so well that Oklahoma was one of only a handful of states that did not have to borrow money from the federal government to shore up their Unemployment Insurance Trust Funds during the years after the Great Recession. This is great news since the Oklahoma economy has been taking it on the chin with the falling oil prices, layoffs in the energy sector, state hiring freezes, and severe budget cuts.

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If predatory lending is restricted, Oklahomans will find better alternatives

by | April 6th, 2016 | Posted in Blog, Financial Security | Comments (0)

loan trap

Whenever advocates argue for stronger regulation of payday loans or for preventing the introduction of new high-cost loans, defenders of the high-cost loan industry commonly argue that without these products, Oklahomans would either turn to loan sharks or be left without any way to cover their unexpected expenses.

Yet numerous states have much stricter rate caps and other regulations on payday loans than Oklahoma, and families in those states are not running to loan sharks.  If Oklahoma were to restrict payday loans, will low-income families be left without any legal way to pay their bills?

The short answer is no. Aggressive marketing by predatory lenders convince many families that high-interest loans are their best option, but in fact these loans strip wealth from families and throw them into a cycle of debt that can be impossible to break. Before payday lenders existed, families had other ways to cover unexpected expenses as well as recurring expenses when their income fell short. If predatory loans are banned in Oklahoma, these alternatives are ready to fill the gap.

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These Oklahoma bills could help put a stop to debtors’ prisons

Dozens of fees are heaped upon people charged with crimes in Oklahoma. They are used to support services like court filings, law libraries, public defenders, and courthouse security. When defendants can’t pay, the consequences are far-reaching; last year a series of articles by Oklahoma Watch chronicled the financial pressures put on people involved in the criminal justice system and their families.

Since the approval of State Question 640 made tax increases much more difficult to enact, the number of fees charged on criminal defendants has almost tripled, from 23 in 1992 to 63 in 2014. In effect, we have transferred the cost of providing public safety from taxpayers as a whole to the mostly low-income Oklahomans who become wrapped up the criminal justice system (an estimated 60 to 90 percent of all criminal defendants are indigent).

However, Oklahoma may have finally reached a tipping point as lawmakers realize that these fees can work against the goal of protecting public safety. For the first time in years, legislators are seriously considering measures to reduce the fines and fees that keep too many Oklahomans in an inescapable cycle of debt. These are some of the bills that were introduced this session:

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Why volunteer tax preparation is key to keeping Americans out of poverty

by | February 17th, 2016 | Posted in Blog, Financial Security, Taxes | Comments (0)
Startup Stock Photo

Startup Stock Photo

Millions of low- and moderate-income working families in the United States benefit from a couple of key tax credits that are among the most important ways that we keep people out of poverty and support children’s development. But to receive these tax credits, families need to file a tax return, which can be a costly and confusing task for Americans who are already working long hours and struggling to get by. Fortunately, working families across Oklahoma have a free option when preparing their taxes.

The Volunteer Income Tax Assistance (VITA) program is available to families making less than $54,000 a year who need assistance in preparing their own tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to people across Oklahoma. Included in the services they provide for tax payers is information about special tax credits for which they may qualify, such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Last year, the average refund for those filing returns with VITA was $1,422.

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