Each year, 12 million Americans will take out a payday loan, and the majority of them won’t be able to afford repayment, trapping them in a vicious debt cycle with sky high, exorbitant annual interest rates of up to 600 percent. If you’re asking yourself why someone would voluntarily agree to pay a 600 percent interest rate, it’s because it’s a bit less voluntary than you think. At this very moment, 40 percent of Americans don’t have $400 on hand in case of an emergency. That’s over 130 million people who have nothing when a car accident, a health problem, or a job layoff occurs. Desperate times call for desperate measures, and there’s no shortage of lenders willing to make a quick buck off of someone with nowhere else to turn.

Last week, Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders introduced the Loan Shark Prevention Act to offer a better option to those 12 million. The bill is an ambitious effort to cap consumer loan interest rates at 15 percent, and introduce postal banking to ensure that the most vulnerable Americans still have access to credit when they need it most.

This is a commendable first step to address a massive, oft-ignored credit problem in the American economy.

As of 2019, Americans owe over $1 trillion in credit card debt, with an average debt of around $4,293 per person. Of all the millions of Americans who owe, only 40 percent make enough monthly to pay off their debt each month. That means a whopping 60 percent of Americans with credit card debt owe thousands of dollars they can’t afford to pay off, with annual interest rates ranging between 15 and 23 percent - but that doesn’t even take into account the penalties for late payments, surcharges, and fees common to most credit cards.

Crunching the numbers on payday lending presents a similarly bleak portrait of exploitation. Payday lenders offer short-term loans at extremely high interest rates as an alleged quick-fix, but 4 out of every 5 loan recipients end up renewing their loans because they can’t repay.

For too long, payday lenders and credit card companies have secured their profit margins by scraping away at the already scant incomes of the poorest working Americans. These companies have trapped millions in a vicious cycle of debt and minimal repayments at the same time that the majority of these loan-seekers struggle under rising costs of living and stagnant wages. The Loan Shark Prevention Act doesn’t tackle those root causes of desperation, but it does take the crucial step of stopping lenders from making a bad situation immeasurably worse for an American worker.

Clearly, we need a better option to ensure millions of Americans have safe and secure access to credit. The bill proposes basic postal banking and short-term, government-guaranteed loans at the nation’s 31,000 post offices, an idea shortlisted by several Democratic 2020 candidates as well. This idea is one of several possible options to extend credit, and I welcome the dialogue.

At the core of the issue, however, is an inconvenient truth - it’s expensive to be poor in America. Payday lenders prosper because millions among us can’t afford the dignity of a basic lifestyle amid low wages, rising housing costs, and surging consumer debt. The most vulnerable people in this country are often one emergency away from financial ruin, and each and every time a payday lender profits off that precariousness, it deepens our already vast inequality divide. If we have any chance of fixing our rigged economy, then Congress must offer real, substantive, and immediate solutions to the millions of Americans who are crushed under the weight of that inequality. The American worker - quite literally - cannot afford to wait.