Why are payday loans so popular with the military?

Source: Al Pascual, Javeline Strategy & Research (American Banker)

Short-term lending products bridge a financial gap for their users, but the rates that lenders charge — and sometimes obscure as fees — can verge on predatory. Most consumers avoid these products, but active members of the military seem to embrace them.

At Javelin Strategy & Research’s blog, we’ve found 44% of active duty military members received a payday loan last year, 68% obtained a tax refund loan, 53% used a non-bank check-cashing service and 57% used a pawn shop — those are all extraordinarily high use rates. For context, less than 10% of all consumers obtained each of those same alternative financial products and services last year.

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