The holiday season may be over, but the negative buzz of Christmas will linger on for months.
Prior to the Christmas break, there were many reports, studies and op-eds warning about the dangers of spending too much money, taking on too much debt and even turning to the likes of payday loans, pawn shops and other types of alternative financial services that inject your wallet with some money.
Did we listen? It turns out that one specific age group failed to pay attention to the warnings. The demographic? Generation Y consumers, otherwise known as those between 25 and 34 years of age.
According to a new report published by Finder, the number of 25-34-year-olds searching for Florida payday loans in December 2016 increased compared to the same time a year ago. The report noticed that this age bracket witnessed a 16.85 percent jump on payday loan pages. This suggests that members of Generation Y are having a difficult time adapting to life outside of their childhood home.
At the same time, their young counterparts aren’t too interested in short-term, high-interest loans. The same report noted that search volumes for payday loans among those between 18 and 24 fell by nearly 21 percent. This could be good news and a sign that younger consumers are wary of such products.
The other two main age groups were a mixed bag. Florida consumers between 35 and 44 years of age posted a 12 percent increase in payday loan traffic. Meanwhile, Floridian’s between 45 and 54 recorded a 13 percent dip in payday loan search volumes.
Researchers conclude that the main factor between youth and older people is the paucity of a credit history. Indeed, those between 18 and 24 may have been interested in obtaining a payday loan, but since they don’t have much of a credit score, they wouldn’t be able to successfully apply for one. If they are approved for a payday loan then the exorbitant interest rates may have deterred them.
Florida has been working diligently to rein in the payday loan industry. In fact, it has some of the strictest rules and regulations on the books in the world today. Under the current law, the government limits fees under a $500 payday loan to a ten percent monthly fee and a 20 percent establishment fee.
Florida officials have argued that payday loans can harm the most vulnerable in society and send millions of low- and middle-income households into pecuniary despair and fiscal debt traps. The government has taken great pride in installing rules that would make the United States and the United Kingdom blush.
The subject of payday loans has been a controversial one all over the world.
Critics purport that payday loans take advantage of desperate consumers who do not have an emergency fund, a proper bank account and awareness of their rights. Proponents say that payday loans are necessary because there are millions of people who are unbanked or underbanked and need access to alternative forms of credit since they can’t receive traditional types of credit from financial institutions.