By Paul Kiel
One day late last year, Katrina Sutton stood at a gas pump outside Atlanta and swiped her debit card. Insufficient funds. But that couldn’t be. She’d been careful to wait until her $270 paycheck from Walmart had hit her account. The money wasn’t there? It was all she had. And without gas, she couldn’t get to work.
She tried not to panic, but after she called her card company, she couldn’t help it. Her funds had been frozen, she was told, by World Finance.
Sutton lives in Georgia, a state that has banned payday loans. But World Finance, a billion-dollar company, peddles installment loans, a product that often drives borrowers into a similar quagmire of debt.
World is one of America’s largest providers of installment loans, an industry that thrives in at least 19 states, mostly in the South and Midwest; claims more than 10 million customers; and has survived recent efforts by lawmakers to curtail lending that carries exorbitant interest rates and fees. Installment lenders were not included in a 2006 federal law that banned selling some classes of loans with an annual percentage rate above 36 percent to service members — so the companies often set up shop near the gates of military bases, offering loans with annual rates that can soar into the triple digits.