Caskey, J. P. (2001). Payday lending.
Financial Counseling and Planning, 12(2), 1-13.


P. Caskey1

paper analyzes payday lending. Payday lenders generally make uncollateralized
loans of $100 to $500 that borrowers agree to repay within about two weeks.
Annualized interest rates on these loans are typically 400% or more. This
paper explains the key features of payday loan contracts, reviews data
profiling payday loan customers, and examines why people use these high-cost
loans. The paper also provides data on the frequency with which customers
use payday loans, addressing the charge that many customers become entrapped
in a revolving series of short-term debts. 

Key words: Payday loan,
Debt problems, Consumer finance 

1. John
P. Caskey, Professor of Economics, Swarthmore College, 500 College Ave,
Swarthmore, PA, 19081. Phone: 610-328-8128 Fax: 610-328-7352. E-mail:

people helped me to understand better the payday loan industry and I am
grateful to them all. Among those who made special contributions are David
Cowles, Jean Ann Fox, Bob Snarr, Billy Webster, and staff members of the
Indiana and Wisconsin Departments of Financial Institutions. In naming
them, I do not suggest that they necessarily agree with the ideas expressed
in the paper or its tone. I am solely responsible for any errors or misinterpretations.

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