NPR recently reported that there are more cash advance locations in the US than Starbucks. The particular store in this story had an interest rate of something like 526% yearly. The main question of the story revolves around the question of predatory lending. The store posted in plan view the interest rate yet they still get business.
While I hate that these businesses exist, the problem here is really more about our education system than the capitalist that exploit this issue. Most of these people have very poor credit ratings and can not get a loan through normal channels or they spend beyond their means. The reason for this is because they have no idea how to use money.
I made it all the way through college without ever having to take a class on economics. Luckily people around me understand money and taught me how it can work for me. Since making money is practically as American as apple pie I'm at a loss as to why there is no requirement to teach our children about things like interest rates, credit cards, credit ratings, filing taxes, balancing a check book, or how the stock market works. These things are not like Nascar or hunting that are completely unnecessary, you need to understand how to use money to be successful. I would argue that this is more important than teaching History, yet it is not given that level of importance by our government.
Another good example of this problem is the great recession. While much of the blame for the recent housing bubble falls at the feet of big business, the blow could have been lessened if many of these people who took out loans they could not afford understood exactly what they were getting themselves into. Ironically the phrase that best sums up this issue is one I learned in History - "Those who can not learn from History are doomed to repeat it".
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