As many Americans suffer financially through the lingering COVID-19 pandemic, it’s a good time to be a payday lender, particularly in the South, where cities have the highest numbers of payday loan storefronts in the U.S., and residents are doing a lot of complaining to the Consumer Financial Protection Bureau.
A recent study by DebtHammer compared data from U.S. cities with populations of 500,000 or more to find the top cities with the worst payday lending problems. Rankings were compiled by comparing stores per capita, internet search volumes, loan rollover numbers, interest rates and maximum loan amounts.
Memphis, Tenn. tops the list. Jackson, Miss., Las Vegas, Baton Rouge and New Orleans round out the top five.
Based on the study’s results, payday loans are a bigger problem in the south. Nine of the top 10 cities are located in southern states, with cities in Tennessee (Memphis, Nashville and Chattanooga); Mississippi (Jackson); Louisiana (Baton Rouge and New Orleans); Texas (Dallas-Forth Worth and Houston); and Alabama (Birmingham) on the list. Las Vegas, Nevada is the outlier.
A high number of unbanked residents is cited as one likely reason for the pay day lending crisis. All of the states on the list except Nevada have an unbanked population of 7.1 percent or higher.
Another possible contributing factor— all of the top five cities are located less than 50 miles from a casino. Gambling is a $110 billion industry in the U.S. As many as 23 million Americans go into debt because of gambling, with the average loss estimated at around $55,000.
There are 157 payday loan stores within the Baton Rouge metropolitan area, or 19.75 per capita, with a maximum interest rate of 391 percent. The population is 794,838. The majority of residents – 54 percent– are Black, with 36 percent non-Hispanic white.
About 10.8 percent of Baton Rouge residents are unbanked, and another 16.5 percent are underbanked. The poverty rate is 24 percent and the median household income is $44,470.
The most populous city in Louisiana, New Orleans ranks No. 2 in the U.S. for Google Trends search volume for “payday loans.”
In New Orleans, about 17. 4 percent of the residents are unbanked, and 16.5 percent are underbanked.
The poverty rate is 23 percent and the median household income is $45,615. The median age is 38. The population of the New Orleans metro area is 1,422,827. There are 122 stores offering payday loans, or 19.33 per capita, with a maximum interest rate of 391 percent. New Orleans residents are 58 percent Black or, 30 percent non-Hispanic white and 3 percent Hispanic white.