Everything unraveled when Kisha Howards mother had a stroke.
Then it was the paperwork.
Her mother was already living on a fixed income back in Orlando.
Kisha Howard of Orlando used payday loans to help her mother after she suffered a stroke. Tina Russell/The Penny Hoarder
So when she returned home and medical bills started coming in, Howard started to panic.
Her mother needed medication and home health care supplies.
Howard was single and had her own bills to pay.
My budget is already tight, Howard said.
But I had to venture to pick up the slack.
So she took out a payday loan.
And then she rolled it over into another one.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help… People who dont have four-year degrees are more likely to take out payday loans.
So are African-Americans and people who earn less than $40,000 per year.
But you know who uses payday loans the most, according to Pews data?
White women between ages 25 and 44.
Demographics aside, the feeling of being in a financial jam thats making you hyperventilate is universal.
Did you know?
What Are Payday Loans and Why Are They So Complicated?
You only need three things to get a payday loan: identification, a job and a checking account.
But its not cheap.
The lender automatically dings your checking account for your loan balance on your next pay date.
This is fine, if your direct deposit hits before your payday loan withdrawal.
This is where it gets complicated.
Those longer loans can have an annual percentage rate of almost 400%.
But for many, payday loans arent just the last option.
They also may be the only option.
Its not that simple.
An estimated11% of American adultsare creditinvisible they have no credit history for credit reporting agencies to score.
Regardless of personal credit history, payday loan users seem to be aware of the high costs.
I knew a little about payday loans.
I knew they charged a lot, he said.
Theyre supposed to be for the short term.
And for his short-term need, a payday loan seemed like the best option.
Your credit is worth a lot more than $100, he said.
He doesnt recommend payday loans, but he understands the struggle of many who turn to them.
Its better than getting evicted, he said.
Those everyday expenses combined with the unexpected can make for some pretty tricky money decisions.
TheCFPBclaims thatalmost 70% of payday borrowers take out a second loan.
The average repeat borrower pays$450in fees on top of their principal over the course of a year.
Thats what happened to Lynn, who asked us not to use her last name.
While living in Michigan between 2011 and 2014, she was laid off from her job.
So she took the loan.
There were occasions where I needed another loan within days of repaying the previous one.
She considers her experience with payday loans to be a good one.
She even called it neck-saving.
Meanwhile, the rug has been pulled out from underneath the American worker.
Wages arent keeping up with therate of inflation.
In some cases, Servon is the only one theyve told.
So what are they supposed to do?
For many, payday loans serve as a last-ditch effort to stay afloat.
I went into a robotic mode for a while.
For a little while, having the payday loans made me feel more comfortable.
But in the back of my head, I knew the interest rates.
I knew I owed $41 for every $400 I took out.
She was even able to skip a month on her car payment.
Most people give a shot to duck and dive phone calls about their bills, she said.
But being proactive made billing departments want to work with her.
She doesnt go into panic mode anymore when financial emergencies crop up.
Its an expensive convenience, she said of her experience with payday loans.
Now its my very last resort.
If you have anything left to sell, theres always apawn shop.
You dont need a bank account, or proof of employment, or a credit check.
But in most of the country, its still easy to fall into a payday loan cycle.
The CFPB can make recommendations, but it doesnt have the power to enact a nationwide interest rate cap.
(The CFPB, its worth noting, is funded by the Federal Reserve, not taxpayer funds.)
We can find ways to protect people at vulnerable moments, she notes in The Unbanking of America.
For now, the decision to take out a payday loan remains deeply personal.
Lisa Rowan is a writer and producer at The Penny Hoarder.
When you log into your bank account, how do your savings look?
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
