Payday Lending (2013)

Intro: In the United States there are more than 23,000 payday lending stores, outnumbering the combined total of McDonald’s, Burger King, Sears, J.C. Penney, and Target stores. It may be difficult to believe there are this many until one scans the streetscape and tallies the numerous lending outlets in low-income neighborhoods. None of these lenders make conventional loans. Instead, they offer small loan amounts for short periods of time, usually until the borrower’s next paycheck, hence the term “payday loan.” While some borrowers undoubtedly benefit from this otherwise unavailable source of short-term, small-amount credit, the payday lending business model fosters harmful serial borrowing and the allowable interest rates drain assets from financially vulnerable people.

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