Payday Advance Credit in America: An Analysis of Customer Demand
In 2001, the Credit Research Center at Georgetown University released nation’s first comprehensive economic analysis of consumer demand for, and use of, payday advance services. The study was conducted among a nationally representative sample of customers of CFSA member companies.*
Customers overwhelmingly appreciate the payday advance product.
- Ninety-two percent of customers believe it is a useful financial product.
- Over 75 percent were satisfied with their last transaction, only 12 percent were dissatisfied.
Customers use the service responsibly.
- Sixty-six percent of customers use payday advances to cover unexpected expenses or a temporary reduction in income.
- Thirty-four percent of customers use the product for planned or discretionary expenses.
- Sixty percent of customers either did not renew in the last year or renewed only 1-2 or 3-4 times. (“Renewals” include both rollovers and advances taken out the same day another was paid in full. )
Customers understand the cost of the service.
- Ninety-six percent of customers were aware of and reported the finance charge and could compare it with similar fees.
- Seventy-eight percent of customers could recall that the fee had been disclosed as an APR, although most could not recall the rate.
Most customers fit the expected economic profile of consumers in early life-cycle stages.
- Most come from middle-income, educated young families.
- Forty-two percent of customers own homes and 100 percent have steady incomes and checking accounts.
- Nearly 94 percent have a high school diploma or better; with 56 percent having some college or a degree.
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* The Credit Research Center
McDonough School of Business
Georgetown University, April 2001
