Jan 01 2002

The Economics of Payday Lending

This report examines operations of payday lenders, who uses payday loans and why they choose to do so, and the extent to which customers become frequent users of these loans. It also discusses how credit unions might respond to the rise of the payday loan industry.

The payday lending industry has grown explosively over the past decade and has generated considerable controversy along the way. Today there are 10,000 payday loan offices in the U.S., many operating as part of large multi-state chains.

Drawing on a variety of sources, this report examines operations of payday lenders, who uses payday loans and why they choose to do so, and the extent to which customers become frequent users of these loans. It also discusses how credit unions might respond to the rise of the payday loan industry.