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Featured Advisor



Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management

City:Northbrook

State: IL



BIOGRAPHY:
At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Twelve Million Americans Use Payday Loans Annually: Study

"Emergency" loans being used more for meeting daily living expenses

| BY Donald Liebenson

Nearly six percent of American adults have used a payday loan in the past five years, according to a new Pew Charitable Trusts survey. Twelve million used payday loans in 2010, the most recent year for which substantial data is available.

Payday loans  are a short-term, high interest loan that gives people access to emergency cash. Per agreement, the money is paid back on the next payday. But they are primarily being used to cover ordinary living expenses over the course of months instead of unexpected emergencies over the course of weeks, the Pew study found.  These findings challenge the conventional wisdom of payday loans. “Payday loans are marketed as two-week credit products for temporary needs,” observed Nick Bourke, project director for Pew’s Safe Small-Dollar Loan Research Project, in a statement. “In truth, average consumers are in debt for five months and are using the funds for ongoing, ordinary expenses—not for unexpected emergencies.”

The report found that among people who initially took out a payday loan:

·        69 percent used it to cover a recurring expense such as utilities, credit card bills, rent or mortgage

·        16 percent used it to cover an unexpected expense, such as a car repair or emergency medical expense

The primary payday loan borrower is white, female, and are  25-44 years-old. But the study found that, after controlling for other characteristics, those without a four-year college degree, home renters, African-Americans, those earning less than $40,000 annually, and those who are separated or divorced, “have higher odds of having used a payday loan.”

When asked what they would do if they did not have access to payday loans, 81 percent responded that they would cut back on expenses, such as food and clothing. More than half would delay paying bills, borrow from family or friends, or sell or pawn possessions.

Forty-four percent said they would take a bank or credit union loan, while 37 percent said they would use a credit card. Seventeen percent would borrow from an employer.

On average, a payday loan borrower takes out eight loans of $375 each per year, and spends $520 on interest. As a recent Millionaire Corner story reported, debt collection scammers often take advantage of payday loan borrowers.

At a time when 5.4 million Americans have been jobless for at least 27 weeks, experts are recommending that households endeavor to have nine months to a year’s worth of savings on hand in an emergency fund.

 

 



About the Author


Donald Liebenson

dliebenson@millionairecorner.com

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.