‘In a perfect world it would be great if they didn't exist’: How Australians experience payday loans
Article first published online: 21 FEB 2014
© 2014 The Author(s). International Journal of Social Welfare © 2014 International Journal of Social Welfare and John Wiley & Sons Ltd
International Journal of Social Welfare
How to Cite
Banks, M., Marston, G., Russell, R. and Karger, H. (2014), ‘In a perfect world it would be great if they didn't exist’: How Australians experience payday loans. International Journal of Social Welfare. doi: 10.1111/ijsw.12083
- Article first published online: 21 FEB 2014
- Manuscript Accepted: 14 JAN 2014
- payday loans;
- community finance;
In the last few decades, payday lending has mushroomed in many developed countries. The arguments for and against an industry which provides small, short-term loans at very high interest rates have also blossomed. This article presents findings from an Australian study to contribute to the international policy and practice debate about a sector which orients to those on a low income. At the heart of this debate lies a conundrum: Borrowing from payday lenders exacerbates poverty, yet many low-income households rely on these loans. We argue that the key problem is the restricted framework within which the debate currently oscillates.
Key Practitioner Message: ● Framing payday borrowing as a problem of market failure leads to one-sided and ineffective regulatory responses; ● Until governments instigate real alternatives for cheap and readily available credit, and broader anti-poverty measures, curbing access to payday lenders can have the perverse effect of increasing privation; ● For practitioners seeking to abolish payday lending, campaigns for higher wages and a liveable social welfare income are central.