Research

Consumers who took out small loans using cash advance apps paid triple-digit annual interest rates, experienced high levels of repeat reborrowing, and incurred more bank overdraft fees.

The Department of Education’s newly launched income-driven repayment (IDR) program, “Saving on a Valuable Education (SAVE),” represents a significant step forward in improving the affordability of federal student loan repayments for millions of borrowers. SAVE accomplishes that goal by basing repayment on a realistic estimate of a borrower’s discretionary income considering the borrower’s family size and reducing the amount of income that applies to repayment by half. The plan also prevents unpaid interest from increasing a borrower’s loan balance and ensures that any remaining balance is...

Read a new report from CRL and California Policy Lab on the Department of Education’s latest income-driven repayment plan, SAVE which could revive the homeownership dreams of millions.

Buy Now, Pay Later (BNPL) or pay-in-four products allow consumers to purchase goods in four equal, often interest-free installments over a set time period (often 6 weeks). BNPL is often available directly at checkout on an e-commerce website (like Amazon or Apple) or through a third-party smartphone or web application. Examples of third-party BNPL providers include Affirm, AfterPay, Klarna, Splitit, Sezzle, Paypal, Perpay, and Quadpay/Zip. While many BNPL providers also make installment loans that carry interest, this research paper addresses only products that meet the Consumer Financial...

Among the hottest consumer finance topics in recent years is the proliferation of online lenders offering fintech cash advances, including the subset of those lenders who offer earned wage advances (EWA). These are very short-term loans of small dollar amounts that users can access through a smartphone app. Lenders that offer these products strenuously attempt to avoid being regulated like other lenders and rely on legal fictions to assert that their loans are not credit. These lenders also typically argue that their products further financial inclusion while, in reality, the worst versions of...

Many people involved in the criminal legal system live on the economic margins. Most defendants are unable to hire their own lawyer due to indigency. In North Carolina, the average person in prison doesn’t have a high school diploma. The cost of involvement in the criminal legal system can quickly add up to thousands of dollars, but the people expected to pay these costs often don’t have the financial resources to do so. Debt that results from this involvement can be difficult or impossible for them to pay off. North Carolina law provides a number of ways for court officials to attempt to...

New data from the bipartisan polling team Lake Research Partners and Chesapeake Beach Consulting shows that voters across the political spectrum overwhelmingly support the ongoing mission of the Consumer Financial Protection Bureau (CFPB) to regulate the financial industry and protect consumers. The survey also revealed strong support for maintaining the secure, independent funding mechanism for the CFPB. These new findings are consistent with over 10 years of opinion research demonstrating strong public support for the agency’s role and work. Voters are strongly supportive of a variety of...

Consumers are increasingly accessing small short-term loans through digital cash advance and Earned Wage Advance (EWA) online applications. Consumers can receive advance amounts up to $750 per pay period while using these apps. Some companies contract with employers to provide this product while others work directly with consumers. In the direct-to-consumer model, the advances are often marketed as “free,” but providers require a variety of fees to expedite the advance and employ pressure tactics allowing them to collect fees in the form of “tips”. These fees make advances very costly for...

Millions of Americans continue to experience financial precarity, and this report illustrates how payday and car-title lending extract financial resources from communities across the United States.

Payday lenders charge exorbitant fees to borrowers without assessing their ability to repay, and the annual interest rates on these loans are in the triple digits.