Payday Loan - A Multi Billion Industry

Payday Loan or Payday Lending also known as fringe lending registered phenomenal growth over the last decade, according a forum sponsored by the National Endowment for Financial Education and the Consumer Federation of America there were no known payday lenders in America in the early nineties. Presently there are over eleven thousands such lenders with revenues in excess of 48 billion dollars performing 80 million transactions annually.

This industry serves mainly low income households with bad credit, most borrowers are mainly from minority groups that are not well served by the banking industry. The high interests charged (usually as high as 35% for a two week loan) has plunged many low income families into debt cycles they may never get out of, thus undermining there financial growth. The growth of this industry reflects the problems that plague the banking sector as whole, simply put; people borrow from payday lenders simply because they have no other alternatives available to them. Opinions are divided on fringe lenders with one side calling them viable lenders to bridge short term cash flow deficits other refer to them as legal loan sharks.