Sen. Brown proposes alternative to 'payday loans' - WFMJ.com News weather sports for Youngstown-Warren Ohio

Sen. Brown proposes alternative to 'payday loans'

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COLUMBUS, Ohio -

With millions of Americans turning to payday loans to make ends meet, U.S. Senator Sherrod Brown is proposing a short-term cash advance solution.

Low-income workers nationally would be allowed an advance on their income tax refund, rather than turning to payday loans for a quick influx of money, under a proposal U.S. Sen. Sherrod Brown made on Wednesday.

The proposal would allow low-income families and individuals to receive a portion of their earned income tax credit, ahead of tax time.

Those who are eligible could receive the early refund without fees or interest on the tax credit up to $500. The amount received early would be deducted from the person's refund at tax time.

Senator Brown says the bill isn't designed to help everybody, but those working hard and still receiving a relatively low income.

"The couple of months before they're eligible to get their tax refund they might have some serious financial problems where they just need a few hundred dollars to be able to tide themselves over until they get their refund, we would advance $500 of this no more than that under our plan," said Sen. Brown.

Brown said his proposal is an alternative to payday loans, which can carry hidden fees and large interest rates.

"Ohioans shouldn't be trapped with a lifetime of debt from predatory loans particularly if they have tax refunds waiting for them," Brown said. "Three-quarters of Americans who turn to costly, high-interest payday loans may have money that they can claim each tax season in the form of the Earned Income Tax Credit."

To participate, workers would enroll in the program through the employers mid-year and request the early payment.


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