Pew Survey: Payday Loans Fail to Work As Advertised

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Research shows that the average payday loan is $375

WASHINGTON -- A new report from The Pew Charitable Trusts, Payday Lending in America: How Borrowers Choose and Repay Payday Loans, sheds light on the decision 12 million Americans make every year to use a payday loan. Pew's survey results reveal that people choose these loans to avoid outcomes like long-term debt, borrowing from family or friends, overdraft fees, and cutting back further on expenses. But the average loan requires a repayment of more than $400 in two weeks, the typical duration, when the average borrower can only afford $50. When borrowers have trouble paying off the loan, they return to the very same choices they initially tried to avoid.