04/24/2013 - The Philadelphia Inquirer published Wednesday an article about how payday loans trap borrowers in debt. The article cites both a study from the Consumer Financial Protection Bureau and a February report by Pew's Safe Small-Dollar Loans Research Project.
"Short-term payday loans, and similar ‘deposit advance’ loans offered by major banks, are trapping many consumers in a ‘revolving door of debt,’ according to a study due to be made public Wednesday by the Consumer Financial Protection Bureau.
"The CFPB's study echoes findings in a February report by the Pew Charitable Trusts' Safe-Small Dollar Loans Research Project. Pew said 58 percent of payday loan borrowers had trouble meeting monthly expenses at least half the time because they 'are dealing with persistent cash shortfalls rather than temporary emergencies.’ Pew said just 14 percent of borrowers ‘can afford enough out of their monthly budgets to repay an average payday loan.'
"Pew's report said payday borrowing 'is largely driven by unrealistic expectations and by desperation.'"
Read the full article, "CFPB: Payday loans leading to 'revolving door of debt'", at the Philadelphia Inquirer website.