January 2, 2009, Newsletter Issue #39: Myth: Payday Advances Take Advantage of the Poor, the Military and Minorities

Tip of the Week

Payday advances are marketed toward subprime clients without a distinction of employment or culture. In fact, payday loans are marketed toward those people earning between $25,000 and $50,000 per year. Most payday advance members are under 45 years old and all payday advance applicants must be currently employed with a steady income and have an active checking account to qualify. The majority of payday advance applicants own their own homes and are college graduates. In reality, payday advances are meant for the American middle class who are hard working adults with an immediate emergency need that cannot be satisfied through bank and union loans.

Payday loans do not attempt to take advantage of any particular demographic, including military personnel. The Community Financial Services Association of America (CFSA) is the organization that deals with payday loan concerns. They have “appointed a military advisory council to develop a code of military best practices by which our members must abide.” Furthermore, according to the CFSA, “Penn, Schoen & Berland Associates found that only 3.69 percent of military had taken out a payday advance in the last five years – and only 1.18 percent had an advance outstanding.”

The fact is that a payday loan is marketed and supported by middle class customers who have continuous employment, an active checking account and need emergency funds until their next payday. Payday advances are not meant for persons who cannot afford to remit payment on the payday advance.

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