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Pew Study Says Americans Want Payday Loans to Be More Regulated
Thursday, July 30, 2015 6:30 AM

In a new study by The Pew Charitable Trusts, 3 out of 4 Americans would prefer credit unions or banks to offer small-dollar loans at rates lower than those offered by payday lenders. The study indicates broad support among Americans for the types of reforms on payday lending proposed by the Consumer Financial Protection Bureau, the federal agency with authority over payday loans.

Roughly 12 million Americans use payday loans annually, spending an average of $520 in fees to repeatedly borrow $375.

In March, CFPB proposed a framework for regulating these and similar loans. The Pew Charitable Trusts then conducted polling in May to gauge Americans’ views on payday lending, the key elements of the CFPB proposal, and the types of loans that would be likely to result from it. Respondents overwhelmingly see as unfair the prices charged for loans currently offered by payday lenders, some of which probably would still be available under the proposed CFPB framework.

About 75 percent of respondents believe payday loans should be more regulated. Respondents believe the types of small loans that would probably be offered by credit unions would have fair prices, even though the rates are higher than those for mainstream credit, such as credit cards. For example, 76 percent viewed a fee of $80 on $500 paid back over four months as fair.