Last month, the Pew Charitable Trusts released Who Borrows, Where they Borrow and Why, the first in their Payday Lending in America series. Their research gives us insight into behaviors and policies behind the use of payday loans, which we know are a costly alternative to traditional banking. Among five groups identified as highly likely to take out payday loans are individuals earning less than $40,000 annually.
In the report and interactive features, Oklahoma clearly stands out with the highest usage rate in the nation for payday loans, at 13%. Part of the problem for Oklahoma, as pointed out in the Pew report and numerous news articles, are the permissive laws regulating payday lenders. The so-called “hybrid states,” which restrict storefront payday loan operators to lower limits on fees, all have usage rates significantly lower than Oklahoma. However, the best results are from states with the most restrictive laws, and therefore no storefront payday loan operators, some of which come in as low as 1%. (more…)