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New Study Confirms Same Ol' Debt Trap

5/8/2013

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A new study released by the federal Consumer Financial Protection Bureau confirms decades of other research finding that payday loans put borrowers at risk.  Thankfully, Pennsylvania's laws effectively keep these predatory two-week 300% APR payday loans out of its borders.

The findings, shown in the graphic to the left, reveal what has long been known: the terms of the payday loan product combine to create a debt trap by design. The CFPB study was based on an analysis of 15 million payday loan transactions over a 12 month period - data that was provided by the payday lenders themselves.

The study confirms the importance of upholding Pennsylvania's strong laws, which effectively prevent the payday debt trap from flooding into our neighborhoods.  Data revealed that:
  • Payday loans carry on average a 339% APR
  • 1 out of 4 payday borrowers borrowed against their public benefits, such as Social Security Income, or retirement funds as collateral for the loan.
  • The average borrower is stuck in payday loan debt - with a single company - for nearly 200 days.
  • Borrowers taking out 10 or more loans a year account for 75% of payday lenders' revenue. 

With these findings confirming not only the decades of research by others, such as the U.S. Department of Defense, Pew Charitable Trusts, Center for Responsible Lending, but also the experiences from states that, unlike Pennsylvania, have legalized 300% APR, two-week payday loans, it is more important than ever to uphold Pennsylvania's existing strong laws. 

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    News Updates

    • Archives:
    • Letter: A Payday Loan Debt Trap,Pittsburgh Post-Gazette, 05/27/13 
    • Letter: False Claims by Lending Industry, PhillyBurbs.com, 05/24/13
    • Letter: Stop Payday Lending Legislation, McKeesport Daily News, 05/20/13
    • Another Payday Loan Debate on the Horizon, Morning Call, 5/18/13
    • Editorial: Whose Payday?, Daily News, 4/12/13
    • Editorial: Stand firm against payday loans, Erie Times-News, 03/20/13
    • Letter: PA Residents: Oppose payday loans, DelCo News Network, 03/18/13
    • Payday Loan Affordability Fast Facts, Patriot-News, 03/16/2013
    • Letter: Payday loans are like financial quicksand, Morning Call, 03/07/2013
    • Payday loans easy to get into, hard to get out of, Morning Call, 03/02/13
    • Letter: Predatory lending laws create indentured servitude, PhillyBurbs.com, 02/12/13
    • Editorial: Now or later: Payday lending is bad news for PA, Pittsburgh Post-Gazette, 10/09/12  
    • Editorial: Payday lenders looking for prey among the poor, Philly Inquirer, 10/05/12
    • Letter: Lobbyists are winning, Philly Daily News, 10/01/2012
    • Editorial: Keep ban on payday loans, Scranton Times-Tribune, 09/28/12
    • Letter: Keep payday loans out of PA, DelCo Times, 09/28/2012.  
    • Editorial: Payday lending is just in-state debt trap, Towanda Daily Review, 09/28/2012
    • Letter: Payday lending legislation bad for consumers, Morning Call, 09/26/12
    • Editorial: PA Senate Should Reject Payday Loan Bill,
      Lehigh Valley Express Times, 9/24/2012
    • Editorial: It's a no-brainer, payday bill shouldn't pass, Harrisburg Patriot-News, 9/23/12
    • Payday lenders could score with loan act, Philly Tribune, 9/16/12
    • Op-ed: Rejecting Payday Loan Bill Protects Consumers, The Morning Call, 09/15/12
    • Op-ed: Payday Loans Need to Be Opposed
      DelCo News Network, 8/28/2012
    • Op-ed: Payday lending will lead to abuses
      Erie Times,
      8/19/2012
    • Why to Steer Clear of Payday Loans
      Wall Street Journal
      07/29/2012
    • PA Payday Lending: Short-Term Loans, Long-Term Issues
      Public News Services, 5/16/2012
    • Editorial: Keep payday and predatory lenders out of Pennsylvania
      Harrisburg Patriot-News Editorial, 5/08/2012
    • Payday loans may be returning to Pennsylvania
      Allentown Morning Call, 5/6/2012
    • Predatory bill: Lawmakers would victimize low-income borrowers
      Pittsburgh Post-Gazette, 04/23/2012

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