Google’s announced today that adverts for short-term ‘payday’ loans will be banned on its network from July 16.
It says the notoriously high interest rate loans on offer often lead people into financial difficulties, but that existing mortgage, car, student, commercial and credit card loans won’t be affected by the change in its terms of service.
When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that.
This change is designed to protect our users from deceptive or harmful financial products.
This means that ads for loans that are due for repayment in 60 days or less will no longer be allowed. In the US, the changes also include any loan with an annualized rate above 36 percent, regardless of duration.
While many people, including President Obama, argue that short-term loans keep people in a vicious cycle of poverty – the most expensive loans are offered to the poorest people – some say that over-regulation of the industry will remove a beneficial economic tool that can, if used correctly, help people out in a pinch.