Better Data Is Key to Bank Alternatives to Payday

Walk down your average street in this country, and you’ll find it easier to take out a loan than buy a coffee. With 22,000 payday lending locations in the U.S., Starbucks would have to grow three times in size to compete. Since the 1990s, annual loan volume has bloated to an estimated $27 billion. That’s a lot of coffee. Despite their growth, payday lenders are obviously controversial. Perceived as unfair and even predatory, payday lenders have been targeted by regulators, consumer advocates and lawmakers who object to their pricing, which leaves borrowers in a debt spiral. However, most payday lenders act legally. And the Consumer Financial Protection Bureau’s small-dollar loan proposal may not be the solution. So what alternative to further regulation will make small-dollar lending safer while ensuring consumers…


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