San Francisco’s Mayor Makes a Personal Plea to Just Say "No" to Payday Loans Skip to main content

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San Francisco’s Mayor Makes a Personal Plea to Just Say "No" to Payday Loans


Most experts agree, even in a financial meltdown, the fastest way to go broke is through payday loans. But if you’re like many Americans, you may be facing the economic crisis head-on, and whether that looks like a missed mortgage payment or hovering health care bills, a payday loan might seem like an easy way to weather the economic storm.

Not so says Gavin Newsom. In fact, the San Francisco mayor best known for making the case for marriage equality has now made his case (on January 22) to those considering payday lending: “a payday loan company is not the solution.”


“We've all seen them. Neon signs advertising fast cash and instant money on so many street corners in our low-income neighborhoods. In the United States, there are more than 23,000 of these payday lending loan stores, more than Starbucks and McDonalds combined.

But, it wasn't until I truly delved into how these fast cash operations take advantage of people in need that I began to understand the impact payday lenders have on our poorest communities.

With interest rates as high as 400% APR and a two-week loan term that does not give much of a chance for the loan to be repaid on time, payday loans trap mostly low-income borrowers in a cycle of debt. On average payday loan customers are paying back $800 on a $300 loan, costing consumers more than $4 billion in predatory fees each year.”

Now Newsom is taking on predatory payday lenders by providing alternatives. Working with San Francisco’s credit unions, Newsom developed a new program called Payday Plus SF, an alternative small dollar loan with a maximum interest rate of 18% APR.

"Payday Plus SF is latest in a series of successful financial empowerment and financial literacy programs spearheaded by San Francisco Treasurer José Cisneros. This program builds on an initiative the Treasurer and I launched three years ago called Bank on San Francisco, which has helped more than 45,000 thousand unbanked San Franciscans into checking accounts. Seventy other cities and states across the country are already replicating this program locally. And this week, I met with Treasury Department officials in Washington to talk about replicating Bank on San Francisco on a national scale.

Last month, we launched the Payday Plus SF program at 13 San Francisco credit union locations. This first of its kind program is already showing results."

Newsom says he created Payday Plus SF to help people like Mark Laws, a low-income San Franciscan who found himself in need of emergency cash. Laws was unable to get a credit card and was living paycheck to paycheck with no savings. After the unexpected death of his mother left Laws scrambling for the funds to pay for and attend her funeral. As a last resort, Laws turned to payday lending for the $250 he needed. A few weeks later, high interest on this loan left Laws unable to pay back the balance. To deal with the expense, he went turned to another payday lender and took out another loan to pay off the first -- and so on and so on.

The mayor confirmed that Mark Law's story is typical -– “99% of payday loan borrowers are unable to pay off their loan within the two-week term” -– and the typical California payday borrower will take out 10 loans in a year before they are finally able to repay the original loan.

But with program’s like the Bay Area’s Payday Plus SF, now there’s hope.

"Mark is now one of our success stories -- he took out a Payday Plus SF loan, paid off his debts and is now rebuilding his credit as he makes reasonable monthly payments at his local credit union. We may be the first City to do this, but I know we will not be the last. Predatory payday lenders are a national problem. But with no cost to taxpayers, Payday Plus SF shows what can happen when elected leaders, neighborhoods and the financial community come together to help low-income families in dire, but temporary, financial straits."

For those folks not fortunate enough to live in San Francisco, there are other options. If you’ve already fallen victim to a payday lending scheme, an experienced bankruptcy attorney can end your cycle of endless spending. To get the big picture on how bankruptcy works and how the laws in North Carolina can help you, speak with an attorney at the The Law Offices of John T. Orcutt.

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