The Hidden Costs of Payday Lending

The Hidden Costs of Payday Lending
Authors/editors: Baylor, Don
Type: journal
Publisher: Bureau of Business Research, The University of Texas at Austin
Series: Texas Business Review
Date: 2008-04
Full text:


Payday lending, sometimes known as a cash advance, is a small, short-term, high interest loan that is intended to bridge the borrower's cash flow gap between pay periods. Payday loans are secured by access to the individual's checking account, typically through a postdated check or an automated clearinghouse (ACH) authorization. Available at storefronts and via the Internet, these loans are generally due in about two weeks or on the borrower's next payday. This article examines the nearly $3 billion payday industry in Texas and offers an overview of its practices and impact on Texas communities while raising questions about the need for more state oversight and safeguards.