Recent info about consumer financial debt loads indicates that a cash advance financial debt trap could be better for an individual than mainstream debt. Customers borrow just under $50 billion a year from all payday lending firms. The sum total of all debt owed on credit cards within the U.S., for instance, is over 20 times that much. Consumer debt, which individuals are encouraged to take on, is more of a financial debt trap than any cash advance could be.
Pay day loan have no cause within the $11 trillion debt trap
Payday lenders don't even scratch the surface of the loan industry when compared to mortgage lenders. $10.6 trillion is debt from mortgages alone. Mortgages, if they’re configured with prepayment penalties, are meant to keep people paying. Credit cards are, too. There’s about $822 billion in debt on credit cards. Aside from mortgage loans and credit cards, short term loans debt, or debt from student loans, auto loans, and so forth, totals $1.6 trillion. This debt is still lower than previous years.
The paydayloan industry could not compete if it wanted to
The paydayloan industry is 20 times smaller than the credit card industry. The sum total of the all cash advances and payday loans lent out is less than $50 billion per year. Profit made by payday lenders is on average around 10% a year, which is much less than most lending industries. With such small margins for profit, as outlined by the research that has been done, there is no way that any online loans is nearly as bad as critics contend.
Not that big in comparison
Payday loans are such a small portion of the overall credit market, that seems like ridiculous to single them out compared to other sources of debt. However, payday lenders don’t have the benefit of multi-billion dollar ad campaigns. To learn more yourself, simply visit the Payday Loan Facts and Statistics Report on Personal Money Store.
Information from
Finance Fortune
finance.fortune.cnn.com/2010/11/10/consumer-debts-wont-return-anytime-soon/
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