TIME: Meet the New Payday Loan Customer: Middle-Class, Well-Educated
Meet the New Payday Loan Customer: Middle-Class, Well-Educated
By Martha C. White
October 2, 2013
Fringe financial services like check cashing storefronts, pawn shops and payday lenders carry plenty of stereotypes. Namely that their patrons are not well off and likely made up of the working poor who may not have college educations. That stereotype may be breaking in the wake of the 2009 financial crisis and the recession that followed. Increasingly, consumers going outside mainstream banking look a lot more like, well, the American middle class.
A recent study conducted by the Urban Institute found that, in 2011, 41% of American households reported using what the agency calls “alternative financial services,” according to Boston College’s Center for Retirement Research. That’s up from 36% in 2009, in the midst worst recession since the Great Depression. About a quarter of all households used an alternative financial service within the past year, F.D.I.C. data studied by the Urban Institute revealed, and about 12% had used one in the 30 days prior to the research being conducted. These non-bank services include borrowing activities as well as transactions like cashing a check or buying a money order.
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