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Nationwide Pew Survey Challenges Conventional Wisdom on Payday

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Nationwide Pew Survey Challenges Conventional Wisdom on Payday Loans

Nationwide Pew Survey Challenges Conventional Wisdom on Payday Loans

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MarketWatch
July 18, 2012

Pew Charitable Trusts has released a new report, “Payday Lending in America: Who Borrows, Where They Borrow, and Why.” In it, the organization calculates that U.S. consumers spend $7.4 billion annually on payday loans, forking out interest at an average of $520 per borrower for eight $375 loans or extensions. Payday loans often are considered a “last resort,” but a majority of short-term borrowers cited several alternatives they would use if payday loans become unavailable. Nick Bourke, project director for Pew’s Safe Small-Dollar Loan Research Project, notes that while payday loan regulations have effectively curtailed storefront operations, they have not prompted consumers to seek such loans online. “In states that restrict storefront lending, 95 percent of would-be borrowers have elected not to use payday loans at all. Just five percent went online or elsewhere,” he reports. Pew’s survey about payday borrowing found that most users are employed, white, female, and 25 to 44 years old. A disproportionate amount of consumers who use payday loan products, however, lack a four-year college degree, are home renters, are African American, earn less than $40,000 annually, and are separated or divorced. Pew also discovered that most consumers use payday loans for everyday living expenses — including shelter and utilities — rather than for emergencies.
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Nationwide Pew Survey Challenges Conventional Wisdom on Payday

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