According to the 2012 Pew report, 12 million Americans take out payday loans every year. About 5, 5% of all American adults have used one in the last five years.
The people who are likely to use flash credits are:
- Young (ish) . More than half of all users of payday loans are between 25 and 44 years old. About 9% of people over 20 and 7% to 8% of people over 30 have used this type of loan in the last five years. On the other hand, it is unlikely that people older than 60 use flash credits. About 24% of all Americans are 60 or older, but only 11% of payday borrowers.
- African American . Most payday borrowers are white, but that’s because white people are such a large group. African Americans, who make up only 12% of the population, take almost a quarter of all payday loans. About 1 in 8 African-American adults have used a payday loan in the last five years, compared to only 1 in 25 white adults.
- Low income income . The average family income in the country in 2014 was $ 53,657, according to the Census Bureau. However, most users of payday loans have an income that is far below this level. More than 70% have a family income of less than $ 40,000. People in this group are three times as likely to use flash credits as people with an income of $ 50,000 or more.
- Renters . People who rent a home use flash credit much more often than people who own their home. About 35% of American adults are renters, but 58% of payday borrowers are. About 1 in 10 tenants used a payday loan last year.
- Relatively unskilled . More than half of all payday loan users did not receive any education after high school. Less than 15% of them have a four-year university degree.
- Unemployed or disabled people . Payday lenders are very happy to borrow against your unemployment benefit or disability benefits. About 1 in 10 unemployed Americans have used a payday loan in the last five years – although they may have been hired when they took out the loan. Disabled people use payday loans even faster. About 12% have used one in the last five years.
- Divorced or separated . Only about 13% of American adults are divorced or separated. However, this group makes up 25% of all users of payday loans. About 13% of divorced and divorced adults have taken out a payday loan in the last five years.
Payday borrowers often market their products as short-term emergency solutions such as car repairs or medical bills. But according to the Pew survey, most users don’t use them that way. Almost 70% of first-time borrowers say they have taken out their loans to help pay for basic needs such as rent, food, utilities or credit card bills. Only 16% say they have borrowed the money for an unplanned, one-off release.
- When Pew asked people what they would do if they could not use flash credit, they gave different answers. More than 80% said they would cut back on basic expenses such as food and clothing. More than half also said they would pledge or borrow something from friends and family. However, most users did not say they would use credit cards or take out bank loans – possibly because many do not have enough credit to qualify.