Pew Study Pulls Back the Curtain on Payday Loans

Pew Study Pulls Back the Curtain on Payday Loans 

A study conducted by a team from the Pew Charitable Trusts interveiwed over 50,000 Americans in order to collect data that allowed them to identify demographics of Americams more or less likely to use cash advance loans. The study estimated that as many as 12 million Americans took out a payday loan in 2010. By extrapolating figures from their extensive phone survey, they also estimated that almost 6% of all adults in the U.S. have used payday loans within the last 5 years. 

The study gathered and tracked statistical data like gender, age, income, race, marital status and education level – hoping to study the demographics that are the primary consumers of short-term lending products. They found that most customers are white females between the ages of 25 and 44. The bell curve of customers are younger individuals who make less than $40,000 a year. 

According to the study, people who are divorsed or seperated are more likely than those married or single to take out a payday advance. Likewise, renters are more likely than homeowners, and non graduates, compared to those with college degrees. 

67% of borrowers interviewed admitted to taking out a loan to pay for recurring expenses like rent, groceries or car payments. Only 16% used the loan to pay off something unexpected. 

Americans spend over $7 billion a year in interest payments on their short term loans. 

The report made no judgement as to the legality or effectiveness of payday loans. Nor did they suggest any methods for improving legislation.

Payday lending is a multibillion-dollar-a-year industry, yet very few complaints are ever filed, and the majority of customers admit to being satisfied with their experiences. Advance America, a company that makes over 10 million transactions a year, only received 50 complaints in 2010. 

The Consumer Financial Protection Bureau doesn’t even publish information on, nor offer help with payday lending complaints on their website, as they do for mortgage problems, student loans, and bank products.