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July 19th, 2012 
FAKE NEWS for the Zionist agenda Many people think of payday loans as a way to cover an unexpected emergency – such as a car repair or medical expense – until your next paycheck comes in.
But nearly seven in 10 people who use the short-term, high-fee loans rely on them for recurring, everyday expenses such as rent, food, utilities or car payments, according to a report published Wednesday.
And instead of using them for one quick fix, many are either seeking extensions or borrowing similar amounts again and again. That’s putting many people in debt to payday lenders for months at a time, at very high cost.
“It’s not because of some unusual need that people are turning to payday loans. It’s because of some regular need,” said Nick Bourke of the Pew Center on the States, which published the report.
Payday lenders defend their industry, saying today’s economic reality is that many people regularly need a financial bridge to their next paycheck.
“Of course there’s recurring use for this product. It’s often the best option for millions of Americans that are looking to manage their financial obligations,” said Amy Cantu, spokeswoman for the Community Financial Services Association of America, a trade group for payday lenders.
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About 5.5 percent of American adults have used a payday loan in the past five years, and 12 million used them in 2010, the most recent data available. Demographic data compiled by Pew suggest that customers are typically parents, divorced people and others struggling to get by.
The Pew researchers found that parents are more likely to use payday loans than people without kids, especially if the household income is less than $50,000 a year, about the nation’s median.
In addition, people who are separated or divorced are more likely to use them than those who married or single.
The vast majority of people using payday loans don’t have a four-year college degree, and seven in 10 have a household income of less than $40,000 a year.
More than half of the people using the loans are white, female and between 25 and 44 years old. But that’s partly a function of demographics. African-Americans, which represent a smaller chunk of the population, are more likely to use payday loans than other races and ethnicities.
The loans are typically for $100 to $500, and lenders typically charge $15 for each $100 that is borrowed for a two-week period, according to the Pew report.
Pew found that the average user takes out eight loans of $375 each year and spends $520 in interest. The researchers said the repeated use means that the loan is functioning more like a high-interest line of credit than a short-term fix to a one-time problem.
“People are paying a lot more in payday loan costs and fees than they anticipate going in,” Bourke said.
Cantu, of the lenders trade group, said the fees associated with payday loans are clear to those who use them.
“We’re completely transparent on the terms of service and the costs associated with this product, and consumers choose it because it’s the least expensive option,” she said.
But Pat Seaman, senior director with the National Endowment for Financial Education, said payday loans are among the most expensive ways to borrow money, and the group’s research has shown people turn to them as nearly a last resort.
She suggests that low-income families try to avoid taking out such short-term loans by having an emergency fund of as little as $500. That’s far less than the six to nine months in living expenses many financial experts recommend, but she said it’s a more approachable goal that can help low-income people make it through a tough spot.
If you do use a payday loan, Seaman said to just be sure you clearly understand the terms of the loan, and the fact that the lender is in it to make money as well as provide you with money.
Many states have tightened restrictions on payday lending, and Pew’s research showed that tighter restrictions led to less use.
This year, the new Consumer Financial Protection Bureau began supervising payday lenders at the federal level for the first time. That allows the government watchdog to investigate whether practices are harming customers and to take action when necessary.
The Pew report is based on a broad survey of the general population as well as in-depth focus groups it conducted with people who use payday loans.
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Results with 72 short comments
i’ve seen too many people get into financial trouble using pay-day loan companies. they would be better off using store credit cards.
I’d donate plasma before going to one of those leaches.
They are bad news, but if you need to use them becasue you live outside your means, that’s on you.
Is this a new trend? The article did not specify if the percentage is up. It make more sense if this use has gone up??
These things are designed to keep you in debt, and will only put you more behind… if you can it is in your best interest to wait.
For an emergency I think they are ok, otherwise, stay away. Althought many think a cell phone bill or cable bill an emergency.
I’ve studied the use of these loans for years These are last resort funding. No one gets such a loan if they have other options.
Emergency fund? Don’t they get the people can’t even cover expenses! How could they possibly do that? Get real.
Scam, scam scam. I agree there should be an emergency line of “credit” for people in desperate need, but these are almost criminal. Usury
prey, prey, prey….. Loan Sharks in the 1930’s made a smaller percentage than these companies do.
They are generally a bad deal, but sometimes your only choices are bad and worse.
Unfortunately way too many working people don’t make a living wage, and end up having little choice but to use them.
They should be outlawed in the present form
I’ve used them. A lot of times there is no EXTRA to save . I bet some of those saying don’t use haven’t been hungry or losing the power.
Another case of GREEDY Republicans making money off of poor people.
I was a senior executive for one of these. We spent HOURS in meetings figuring out how to game the lending laws!
Payday loans keep people stuck in a borrow/payback state for months due to cost, but are a desperation move as there are no other options.
Employer should provide this service to it’s employees (only for emergencies) and cash their payroll checks @ no charge – employee relation
Payday loans are bad and should be avoided at all cost. Once sucked in, a consumer will find it difficult to avoid being a repeat customer.
When you use a payday loan it just makes your next paycheck short when you pay it back and then you need another loan. This is loansharkes
I have never used one, but I can see how in todays times folks might need to. So for them its a good thing they are there.
These businesses should be outlawed, Legalized loan sharking
Please develop a budget, save, and live within your means; then you will never have to take out one of these loans
I have to use them sometimes because I have no choice but they should not be allowed to charge interest everytime you make a payment.
It’s usury, plain and simple, and the only purpose is to take advantage of desperate people. The practice is immoral and shameful.
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