Payday blues: Rural Michigan and the quick-cash debt hole

Ludington resident Merenda Vincent: “I just got in deeper and deeper.” (Bridge photo by Ted Roelofs)

LUDINGTON—Four years ago, Merenda Vincent was desperate for cash.

She had an overdue car payment, along with a medical bill she couldn’t pay. Living on a monthly Social Security check of less than $1,000, she had no money in the bank.

Vincent recalled that she walked into a payday lending store called Check ‘n Go outside Ludington, a small Lake Michigan community north of Muskegon. She said she wrote a post-dated check to Check ‘n Go and came out with $100 in cash. A month later, she still could not meet her debt. So she took out another loan. And then another.

Before she knew it, Vincent said, she was in over her head with overdue bills and mounting payday debt costs that in Michigan can carry annual interest rates in excess of 400 percent depending on the size and term of the loan.

Standing outside that store years later, Vincent recalled: “I just got in deeper and deeper. They make it sound so easy, but it really takes advantage of low-income people and people on Social Security.

“I was like, ‘Oh my God, how do I repay this?’”

Opinion: I’m an economist and I support payday loans
RELATED: How one Michigan credit union is helping ease customers from payday loans

Vincent, 67, said she finally dug herself out of debt thanks to a relative who offered a loan she repaid without interest.

But she wonders how many others – especially in rural Michigan – will end up in a similar bind.

“When I moved to Ludington in 2011, there was only one payday lender,” she said. “Now’s there’s three,” she said.


Concern about the vulnerability of cash-strapped residents has spawned a bipartisan effort to rein in payday lending. It’s unclear if the measure will get a hearing in Lansing, however. 

John Rabenold, spokesman for Ohio-based Check ‘n Go, declined to publicly discuss details of Vincent’s past dealings with the firm.

But he said payday lending in Michigan works as intended for those who face cash emergencies, under legislation authorizing payday lending that took effect in 2006.

“It’s a well-regulated industry. Michigan does a very good job,” he said.

A recent analysis of payday lending in Michigan concluded otherwise.

A chart inside a Ludington payday store shows loan rates it is charging borrowers (Bridge photo by Ted Roelofs)

The 2018 report by North Carolina-based Center for Responsible Lending, a nonprofit advocate for loan reform, cites national data that the average payday borrower takes out an average of 10 payday loans a year with average interest and fee charges of $458. In Michigan, 70 percent of payday borrowers take out another loan the same day they paid off their previous loan.

“As such, it is clear that in Michigan,” the report said, “the debt trap is the core of the payday lenders’ business model.” 

The Center’s analysis also belies a common stereotype that quick-cash outlets are confined to rundown urban neighborhoods. Payday lenders are also sprouting in and near small towns throughout rural Michigan,.

According to the report, Michigan had more than 550 payday stores in 2017.

Statewide, there were 5.3 payday stores per 100,000 people in urban areas – but the rate was even higher in rural census tracts at more than 7 stores per 100,000 people.

One Michigan critic of payday lending said the impact on individuals and families is the same, whether rural or urban.

“We see people end up with no money for food or utilities or transportation,” said Jessica AcMoody, senior policy specialist for the Community Economic Development Association of Michigan, a nonprofit that has lobbied for years against payday lending rules in Michigan.

“It just becomes a huge stress on every aspect of their life.”

Payday loan critic Jessica AcMoody: “We see people end up with no money for food or utilities or transportation.” (Courtesy photo)

AcMoody said much of rural Michigan fits the profile payday lenders cater to: households caught in a cash squeeze. That’s more likely where incomes are low.

According to a 2016 Census study, median household income was $51,538 in Michigan's 27 "mostly urban" counties. That compared to $38,145 in the state's 12 "completely rural" counties.

On top of the alleged personal toll, the payday industry in Michigan is dominated by out-of-state firms, with two-thirds of payday lenders in 2017 headquartered elsewhere. That means tens of millions of dollars in payday charges are drained each year from the state economy.

According to calculations by the Center for Responsible Lending, payday lenders cost Michigan consumers more than $513 million in interest and fees between 2012 through 2016.

Advance America, with 144 stores in Michigan in 2017, is owned by a Mexican firm, while its U.S. headquarters is in South Carolina. 

The corporate parent to Check ‘n Go had 110 stores in Michigan in 2017. In 2016, Great Lakes Specialty Finance – doing business in Michigan as Check ‘n Go – agreed to pay a $34,100 fine for allegedly violating a series of licensing requirements of the state Department of Insurance and Financial Services, which has regulatory authority over payday lending in Michigan. It also agreed to pay fines of nearly $30,000 in 2017 and 2012 for similar alleged violations.

Check ‘n Go spokesman Rabenold said fines “from a public policy perspective (are) an indication that the law is working, the regulatory agency is doing their job, and consumers benefit from the protection. “

He added that high APR rates attributed to payday loans are misleading.

“If I lend you $100 today and you give me $101 tomorrow, that equates to a 365 percent APR and yet the cost of credit was 1 percent,” he said. 

Rabenold said payday loans offer a helpful alternative to borrowers who need cash in a crisis but have no other way to get a loan, sparing many from expensive bounced checks or high credit card charges.

The Check ‘n Go website states as much: “When you add up the benefits of online payday loans and weigh the alternatives, it’s clear that payday loans can be a good solution for short-term cash problems… Ready to fix your cash crunch? The sooner you apply the sooner you can get the cash you need.”

Michigan is among 32 states that authorize high-rate payday loans, according to the nonprofit Consumer Federation of America. That means the state allows interest fees that can top 400 percent in annual percentage rate (APR) on a two-week loan. Indeed, a chart on the wall of the Ludington Check ‘n Go showed that a $50 two-week payday loan has an APR of 417 percent. The state limits payday loans to $600 in a 31-day period.

Twelve states prohibit payday lending, while a half-dozen have a more regulated lending market with interest caps on short-term loans. Under the Arkansas Constitution, for instance, loans are capped at 17 percent annual interest, while South Dakota voters passed a 2016 initiative limiting payday loans to 36 percent annual interest, according to the CFA. 

While payday lenders in Michigan are regulated, there’s nothing in state law to bar lenders from stringing together one separate loan after another so borrowers often pay off a previous loan with a new one. Borrowers also can get a second payday loan simultaneously from a different lender.

Recent efforts to curtail payday lending charges in Michigan have stalled in the Legislature.

State Rep. Bill Sowerby, D-Clinton Township, introduced a bill in February to limit annual payday lending interest in Michigan to 36 percent. It’s patterned after a 2006 federal measure that restricts annual lending interest rates for active members of the military and their families to the same percentage. Sowerby introduced a similar bill in the last legislative session that went nowhere.

A scheduled May 22 hearing before the Republican-controlled House Financial Services Committee on the measure was cancelled.

“This bill has support on both sides of the aisle,” Sowerby said, noting that its 36 co-sponsors include five Republicans.

Democratic state Rep. Bill Sowerby introduced a bill to limit payday loan interest rates to 36 percent a year. (Courtesy photo)

“Let’s protect everybody, whether you are in the military or not. Nobody should be subject to these kinds of outrageous fees.”

Bridge Magazine reached out to Financial Services Committee chairperson Diana Farrington, R-Utica, and was told by an aide that Farrington intended to schedule another hearing. Asked through the aide for comment on the merits of the bill, Farrington did not respond. 

In addition to campaign contributions reported by the Michigan Campaign Finance Network dating to 2016 from financial interests like the Michigan Banking Association ‒ which gave Farrington $12,250 ‒ and the Michigan Credit Union League ‒ which gave $10,000 ‒ Farrington received $1,000 in 2017 from Cincinnati-based Axcess Financial Services PAC, according to state financial records. Axcess Financial is the parent company of Check ‘n Go.

The Center for Responsible Lending also found payday lending more prevalent in minority and poorer Michigan communities. Census tracts with over 25 percent African American and Latino populations had 7.6 stores per 100,000 people – well above the state average of 5.6 stores per 100,000 people. Tracts in which household income was below 80 percent of Michigan’s median household income had 9.1 stores per 100,000 people.

“It’s the same thing in Detroit,” said Ruth Johnson, public policy director of Community Development Advocates of Detroit, a nonprofit neighborhood improvement organization. “It’s the low-income household, the household without generational wealth – if anything happens, your hours at work are cut, an unexpected expense, that’s when people start thinking about payday loans.”

Detroit – where roughly 80 percent of residents are black – had more than two dozen payday loans stores in 2017, according to the Center for Responding Lending.

Johnson speculated that some Detroit neighborhoods may be more vulnerable to payday loans because of the disappearance of local bank branches, as well as loan discrimination minorities can face from the banking industry.

“That (chance of getting a loan) can be about the form of your income, as well as the color of your skin,” she said.

In the rural southwest corner of Michigan, the Center for Responsible Lending report identified eight payday stores in or near the small city of Niles. With an individual poverty rate of 30 percent, double the state average, and household income below $32,000, Niles has a concentration of just over 17 stores per 10,000 households, it concluded.

That’s 14 times the per-capita number of payday lending stores in Detroit and six times that of Grand Rapids, the report found. 

South of Grand Rapids, rural Barry County had three payday lenders as of June 2017. That amounted to a drain of more than $500,000 in debt charges in 2016, according to the Center for Responsible Lending.

Lani Forbes, executive director of Barry County United Way, cited the case of a local family that turned to payday loans amid a financial crisis a couple years ago. In this family of five, the husband held a job with a local manufacturer, but the wife became ill and could no longer hold her job as a home health worker. Unpaid bills stacked up.

Forbes said they took out one payday loan, then another. What started as a $325 loan ended in debt exceeding $1,200.

“Now they are caught up in the cycle. They have to pay another payday fee and now they don’t have money for food,” Forbes said.

Barry County United Way connected the family with local food pantries and arranged to pay off about $650 of the loan while the family paid the rest.

“We end up getting involved when the person is totally in crisis. They are in the middle and they can’t get out. They just keep spinning.”

To spread the word about the risks of these loans, Forbes said she often asks community members to guess what interest rates payday lenders charge.

“No one guesses right,” she said.

“They generally believe payday lenders charge around 30 percent or 40 percent. They can’t believe it’s more than 300 percent.”

Facts matter. Trust matters. Journalism matters.

If you learned something from the story you're reading please consider supporting our work. Your donation allows us to keep our Michigan-focused reporting and analysis free and accessible to all. All donations are voluntary, but for as little as $1 you can become a member of Bridge Club and support freedom of the press in Michigan during a crucial election year.

Pay with VISA Pay with MasterCard Pay with American Express Donate now

Comment Form

Add new comment

Dear Reader: We value your thoughts and criticism on the articles, but insist on civility. Criticizing comments or ideas is welcome, but Bridge won’t tolerate comments that are false or defamatory or that demean, personally attack, spread hate or harmful stereotypes. Violating these standards could result in a ban.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.


Wed, 06/26/2019 - 8:39am

'Bridge Magazine reached out to Financial Services Committee chairperson Diana Farrington, R-Utica, and was told by an aide that Farrington intended to schedule another hearing. '

The old 'in a couple of months' they'll forget all this and we can ignore things and continue to get 'campaign contributions' as usual.

Awful, shameful.

Wed, 06/26/2019 - 9:13am

These practices prey on the most vulnerable in our society. I recently paid off two of my brother's payday loans. He is disabled with mental health issues. It started with a small payday loan, but these predators call the day or so before it is due, and offer another, by phone! The spiral continued until he was $650 in debt. A whole months pay. Struggling to keep up. I took him to both places to pay them off. The first one reminded him his loan wasn't due for a few days, then insisted we pay in cash unless we wanted to pay online by credit card! What?! I went next door to my bank and got cash. The next one new exactly who he was and when his loan was due when we walked in. Again, tried to remind him his loan wasn't due, yet. I had cash in hand to pay them, and they said they couldn't take it because their system was down. I asked if I could go to another store, they said no it was the entire state of MI. When I told them that was unacceptable and made it clear I wasn't leaving until my brothers account was cleared, they reluctantly took my cash and wrote me a receipt. Scammers. Scourges on the working poor and those on fixed incomes.

john chastain
Wed, 06/26/2019 - 9:20am

Financial predators, today’s version of loan sharks without the kneecapping. They prey on the poor and financially vulnerable and are backed by the same “investor class” that gave us the housing collapse and the great recession. The states that ban this modern day practice of usury (as defined today, the practice of making unethical or immoral monetary loans that unfairly enrich the lender) are a mixture of Republican and Democratic led states.
They are Arkansas, Arizona, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, North Carolina, Vermont & West Virginia. Apparently Payday lending is so exploitive that’s it’s is something that conservatives and liberals can agree on, and protect their citizens from. Perhaps Michigan might do the same?

Jim tomlinson
Wed, 06/26/2019 - 9:53am

Prime Example pf why govt needs to manage or regulate capitalism. They over reach. Save the socialism epithet. 36% max interest rate is still usurious.

Wed, 06/26/2019 - 9:56am

The deceptive calculation by the payday lender takes advantage of the ignorance of the audience for the example by leaving the time period out. Interest= Principal multiplied by the Rate multiplied by Time( year ) divided by 100.

Wed, 06/26/2019 - 12:26pm

The wrong questions are being asked to change fears these people face.

Why is that the only interest is to go in after the problem has been created and regulation those filling a want of people.
Why isn't there any interest that created the want for this money at any price?
Why is the only help for people after they have gotten desperate?
When will anyone ask those in such desperate feeling situations how and why they reached this point?
As best I can tell, there is an unending demand for these 'payday' loans, why isn't anyone interested in trying to help people avoid a state of such emotional desperation?
Why isn't anyone interested in finding out when people can have their situation interrupted so they won't suffer with the despair that precipitates these feelings of drowning in debt?

Wed, 06/26/2019 - 4:55pm

Many people are asking those questions. Perhaps you haven't been listening.

Thu, 06/27/2019 - 2:06pm

I may not have been listening, but is it possible that nobody in my areas is offering ideas or that they aren't being reported on.
I am surprised that you haven't offered some examples of what people are talking about or places to become engaged or links.
I think the issue is broader than the 'payday' loans [which are symptom], it seems to be a factor in the wealth gap. I would like to be a part of the conversation and possibly contribute to action plans.

middle of the mit
Tue, 07/02/2019 - 2:08am

Frankly, I don't think you listen to anyone that you don't agree with. And when you tell other people to offer you links and information, you are requiring more than you EVER OFFER.

You think payday loans are wrong? You think the average worker gets the shaft? You think there is a wealth gap?

Here is a link for ya!

Wed, 06/26/2019 - 1:00pm

Nobody forced a single one of these people to get those loans.

Wed, 06/26/2019 - 1:32pm

No one can argue PD loans are good. I've seen many people up close with them. These folks borrow $100 (as Ludington woman in your story) and can't pay that back so they borrow another $100 and another. The CU should and will say no to that. They've burned their family before so no loans from them. The 36% interest cap means the PD lenders will be gone immediately and over time and the CUs can't step in at that rate either (remember 36% on a bad small loan is a lot of expensive running around and ultimately a big write-off!), so you end up rearranging the misery with more evictions and car repos. Yah ... PD loans are bad but compared to what.. Broken legs? I'd suggest all the good leftist Bridge readers start their own bank to help with this ... Bank of Rick and Bones?

Robyn A Tonkin
Wed, 06/26/2019 - 8:55pm

Hello Matt:
this article is the first article that you have not had a solution to the problem the article posits. Please, I wish very much that you would wade in and give us your solution to this problem. C'mon, you have a solution to every other problem that the Bridge authors write about, why not this one? Since you know the world would be perfect if conservative people ran it, please give us your perfect conservative, right wing solution to this problem. Surely one exists! Enlighten us!!

Thu, 06/27/2019 - 8:14am

Robyn, That is the point! All you folks on the left think the solution to every problem that faces human is just passing a law and creating a government program. There will be no unintended consequence or adverse incentives, let alone evaluation of cost effectiveness, paradise is just one law away! And never consider , compared to what? That the CU wants to try to help is an act of charity and should be applauded but a different thing than passing a law and seeking a government solution.

Thu, 06/27/2019 - 7:40pm

This article is not about the problem, it is about a symptom. Solutions to symptoms only facilitate the problem by supporting the symptom.
The questions for you is whether you want to solve the problem or to simply promote the symptom.

Paul Jordan
Wed, 06/26/2019 - 2:40pm

Up until the late 1970s there were usury laws that prevented charging outrageous levels of interest. The excuse for doing away with these strict limits was the incredible rise in interest rates at that time, but guess what? When interest rates went down, somehow governments 'forgot' to reinstitute usury laws. (I wonder why?)

Isn't it interesting that self-described Christians are often obsessed with abortion and homosexuality (about which the Bible says little or nothing) and totally overlook usury, which is specifically condemned in the Bible. (In addition, of course, Jesus' driving the money changers from the temple is the only description of an angry Jesus...)

Maybe fundamentalist Christians should shift their ire to usurers.

Ruth Johnson
Fri, 06/28/2019 - 3:43pm

Thank you Ted for this important story. You did a great job of explaining the problem of payday lending, its impact on individuals and communities, and what we can do to solve the problem.

Sun, 06/30/2019 - 2:40pm

Can the governor issue an Executive Order to cap the interest rate since the republican led Congress doesn't want to lose their campaign contributions by doing something?