In San Diego this week a new study was release on the target consumers and average effects of payday loans. Its results contradict previous statements by consumer watchdog groups and politicians that suggest payday lenders target low income or immigrant consumers, the unemployed, or the elderly.
The report points out that more then 19 million US families use payday loan or cash advances each year. Their analysis of the breakdown of these 19 million households show the average payday customer to be middle-income, educated, working families making between $25,000 and $50,000 a year. In addition the study points out that 58% have an associates degree or better, and 1 out of 5 have a bachelors degree. Numbers not far off the education standards for the nation as a whole. These figures are attributed to the fact that in order to receive payday loans, the consumer must have a bank account, be currently employed, and meet minimum income requirements.
The study continues showing that states that have disallowed payday loans have seen a significant increase in bounced checks or exorbitant over balance fees from the banks. Many times these fees exceed the actual amount paid on the consumers check card. Additional unlike other short term loans, payday loans can not be made based on race, sex, social status, or religion.
Some opponents to payday loans suggest employer payroll advances overlooking the fact that employees having financial trouble suffer a stigma at work that can hurt their earning or promotion potential.