I'm always shocked at the amount of Payday lending vendors around the City of Chicago. If I drive one block south to Roosevelt or a couple blocks west to Damen, I start to see the infestation of payday lending.
The 411 on Payday Lending:
- Payday lending is legal and regulated in 37 states
- In 13 states it is either illegal or not feasible, given state law
- 23,000 lenders
- $40 billion industry
- Typical borrower takes out between eight and 10 loans each year
“Payday lenders contend that they provide access to credit for underserved communities,” said Leslie Parrish, a senior researcher at the Center for Responsible Lending. “What they are really providing is access to long-term debt traps which too often lead to extra overdraft fees, credit card delinquency, trouble paying bills including medical expenses, even bankruptcy." (Louisiana Weekly)
The Center for Responsible Lending (yes, you should be familiar with them) explains how payday lending works.
In May, the crew at Planet Money made a podcast about payday lending...check it out.
Additional Reading:
Costly Cash: The Great Recession Is Paying Off for Pawnshops and Payday Lenders
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