Economic Impact of Payday Lending
With our nation in an economic downturn and financial crises rearing their ugly heads in millions of people’s lives, fast payday lending options like ours have remained as popular as ever. These loans give people enough financial flexibility to pay their bills on time and get out from under financial burdens, thus enabling them to take care of their families and improve their future by making one simple transaction.
It’s easy to see how these payday loans aid those who are experiencing financial strains, but there is a far greater positive that often goes unnoticed. Despite the odds against any business sustaining success in the current economic climate, the payday loan business has done just that. From providing jobs, helping people clear their financial hurdles, and contributing economically on the state and national levels, these short-term payday loan companies are indirectly helping those who don’t even use their services!
Digging Deeper
According to a study conducted by IHS Global Insight on financial statistics, the payday lending industry contributed over $10 billion to the U.S. gross domestic product in 2007. Additionally, this industry is responsible for supporting more than 155,000 jobs around the nation and has created more than 28,000 other jobs indirectly via supplier industries. The employees of this industry aren’t getting minimum wage either; in fact, payday loan store locations were responsible for almost $3 billion in labor income, which averaged out to just over $37,000 per store employee annually.
Statistics like these, amidst a poor economic phase, prove the worth of this particular lending industry and give people a reason to believe that applying for these loans, when needed, is not only a smart move, but a move that could help boost the overall economic landscape.
Comparing Popular Lending Options
Short-term payday lending is not the only form that people choose to use, however. Credit card loans are another extremely popular way for the average American to defer immediate payments to a later date. Just as payday lending impacts our economy, credit card lending brings its own unique impact.
Usually, banks and other lenders use strict guidelines to judge whether or not a consumer is trustworthy enough to be given a credit card. Given the current difficult financial state of the economy, the number of people who were able to meet those guidelines were few and far between. Forced to attempt to attract new borrowers, those guidelines have been lowered significantly. Good news, right? Not necessarily. In order to compensate for the lower standards, credit card rates are trending upward, making the overall demand for the plastic lending option essentially unchanged. While it may currently be easier to obtain a credit card as a lending option, be careful and be sure to read the fine print because once you begin to use your new credit card, attempting to make the payments on time may only add to your financial stresses.