Payday loans, pawn shops and other high-cost methods of financing have experienced tremendous growth over the past two decades, and in recent years, nearly one in four Americans have used them, according to a new paper from the National Bureau of Economic Research, the Washington Post reported today. Given the price of such borrowing, it may also be a measure of desperation: The financing fees on the loans are often very high, with annualized percentage rates on common payday loans reaching more than 300 percent, according to the Consumer Financial Protection Bureau. In the agency’s research, the median amount borrowed was $350. The research paper comes as U.S. regulators are preparing to issue new rules for banks offering the short-term, high-interest loans tied to direct deposits of salary or government benefits. The proposed regulations reportedly would restrict borrowers from taking more than one such loan a month. Those rules would not affect the loans offered by storefront vendors, pawn shops and other services, however.
