Lived Experiences with Payday Loans: African American Single Mothers and Employees

Abstract

Payday loans are disproportionately used by African Americans and women including single mothers. Little empirical research exists incorporating data from payday loan employees. This exploratory study used a phenomenological approach and in‐depth interviews to examine the lived experiences of two groups: African American single mothers who used payday loans and former payday loan employees who extended and collected on payday loans. The interviews resulted in four themes from the single mothers' experiences including “right decision at the time” and “it's addictive” and five themes from the former employees including “help the customer come back” and “relating to the customers.”

Examining payday loan utilization among households with mainstream credit access

“…The gender results for this sample differ from some studies that report a larger proportion of payday loan users as female (Chen et al. , 2022; Riley et al. , 2022; Lamb, 2016, 2015; Bowles, 2011).…”

“…Age is nonlinear, suggesting that older ages are associated with a higher likelihood of payday loan use, with the likelihood increasing more quickly at younger adult ages (p < 0.01), in line with past research by Islam and Simpson (2018) and Gross et al (2012). Single parent status is positive and significant, indicating that single parent households are more likely to use payday loans compared to non-single parent households when all other variables are held constant (p < 0.05), which is supported by the literature (Riley et al, 2022;Buckland, 2012). Having nonuniversity postsecondary education, like university education, is negatively associated with payday loan use (p < 0.10).…”

“…(2012). Single parent status is positive and significant, indicating that single parent households are more likely to use payday loans compared to non-single parent households when all other variables are held constant ( p < 0.05), which is supported by the literature (Riley et al. , 2022; Buckland, 2012).…”

“…The proportion of single parent payday loan clients doubled (8%-16%) from 2005 to 2016, while the proportion of female headed households who were payday loan clients fell slightly (42% to 40%). The gender results for this sample differ from some studies that report a larger proportion of payday loan users as female (Chen et al, 2022;Riley et al, 2022;Lamb, 2016Lamb, , 2015Bowles, 2011). It is important to note that the sample members in the current research are the family members most knowledgeable about the family's financial situation who are answering the survey questions for the entire household, which differs from many studies where the sample member is answering the survey or interview questions for themselves as individuals (Lamb, 2016(Lamb, , 2015.…”

Financial stressors and alternative financial service use: Extending the ABC‐X model of family stress

“…According to the FIDC's Survey of Household Use of Banking and Financial Services data, lower-income individuals consistently showed higher rates of using payday loans, pawnshop loans, and auto title loans over the years, compared to higher-income individuals (FDIC, 2018(FDIC, , 2020 and greater difficulty paying monthly bills (Brobeck, 2008). Low-to-moderate-income consumers have fewer financial and social resources to draw upon when facing financial difficulties, such as lower levels of savings (Brobeck, 2008;Collins & Gjertson, 2013) and having fewer family/friends with the means to offer financial support (Collins & Gjertson, 2013Riley et al, 2022.…”