Payday Lending in America
This collection presents the findings of Pew’s Payday Lending in America series. We invite you to explore the current collection’s resources and continue to visit for new data and research on the existing landscape of payday lending around the country.
Twelve million Americans take out payday loans each year, spending approximately $7.4 billion annually at 20,000 storefronts and hundreds of websites, plus additional sums at a growing number of banks. Though they are marketed as short-term products for temporary needs, payday loans are typically used for ordinary expenses not unexpected emergencies. The average customer ends up indebted for five months and pays $520 in finance charges. See our infographic for more on how payday loans work and how borrowers evaluate their credit options. Read our methodology to find out how we conducted our research.
The report features results from a first-ever nationally representative telephone survey of payday borrowers, answering six major questions:
- Who are borrowers, demographically?
- How many people are borrowing?
- How much do they spend?
- Why do they use payday loans?
- What other options do they have?
- Do state regulations reduce payday borrowing or simply drive borrowers online instead?
In addition to reading the full report, you can learn more about loan regulations with this report’s interactive 50-state map or our short history on payday lending laws. Take our brief quiz to learn more about payday loan borrowers. Or, explore an infographic on how borrowers use these products today.
This report shares several important findings, including:
- Payday loans are unaffordable. The average borrower can afford $100 per month, but the average loan requires more than $400 to be paid in two weeks.
- The choice to use payday loans is driven by unrealistic expectations, and desperation.
- Payday loans do not eliminate overdraft risk.
- A strong majority of borrowers favor more regulation of payday loans.
To fully pay off the loan, 41 percent of borrowers needed a cash infusion or resorted to options that are often available instead of a payday loan in the first place, including:
- Borrowing from family and friends
- Selling or pawning possessions
- Drawing on credit cards or other loans
- Using a tax refund
See the full report now, or check out this infographic for a summary of how individuals decide to borrow instead of choosing other options, such as cutting back or deferring other costs, and how they fare using the loans.
Methodology: Pew’s survey of payday loan borrowers is a nationally representative telephone poll conducted in two parts. All data on demographics, storefront and online usage is derived from 33,576 responses (margin of error +/- 0.2%). All of the information about borrower attitudes and experiences is based on 451 to 703 in-depth interviews representative of payday borrowers (margin of error ranges from +/- 4.2% +/- 4.6%). Borrower quotations come from a series of 10 focus groups.
Come back to this collection often for Pew's latest research on payday lending in America, and see the Safe Small-Dollar Loans Research Project’s main page for more information about small-dollar lending.