Do Payday Loans Actually Cause Health Issues?

Taking out various loans that are commonly called “fringe” ones is a standard practice for low-income and part-time workers. These employees just can’t make both ends meet and have to face an emergency or a financial challenge without such short-time credits. The scientists are trying to find the link between payday loans and the borrowers’ health condition.

The Research Basics

The study was conducted by the University of Washington; the research showed that the Americans who are either unbanked or unable to use official financial services feel worse or less healthy than the customers with personal bank accounts or significant savings.

The study abstract was issued in the Health Affair journal, in March, 2018. The survey was based on the files of 15,000 US residents or respondents, collected and analyzed by the U.S Census Bureau.

One of the authors, Jerzy Eisenberg-Guyot, states that the purpose of the research was to find out the reasons of borrowing fringe loans and the official approach of public health departments.

Payday Loans Background

As the study abstract declares, the industry that started growing in the 1980s thanks to the financial market deregulation, is harmful to the working class, causing a great deal of damage due to enormous interest rates. The fast loan services are designed for lowly-paid and part-time employees that lack sufficient money to cover the urgent medical bills, rent payments and food purchases.

Now the industry is prosperous and extensive, being estimated at multi-billion dollar revenues or sales volumes. It is specified by:

Short-time loans are designed to cover emergency expenses, being perfect solutions for these purposes. However, taken out for the monthly needs such as rent payments, foodstuffs or essentials purchasing, they become unbearable, causing nervous breakdowns and various diseases.

The Study Results

The similar study was conducted by social scientists, the students of the Seattle University and the researchers from the U.S. Department of Agriculture. They analyzed the short-time loans that caused spiraling debts, their harm and benefits.

The research conducted in 2018 focused on the health issues attributed to the fringe loans. It showed that:

The researchers confess that the study is based on individual self-reports but not on the actual analysis results or so. Meanwhile, according to other, recent studies, self-assessment is certainly associated with multiple illnesses and, unfortunately, deaths.

Thus, the authors stress the importance of social policy changes, labor protection and strong welfare programs. For example, the minimal wage is to rise, beneficial financial alternatives are to be offered. Otherwise, the loans taken out to pay medical bills can cause the opposing, negative reaction and become the reason for the poor borrowers’ health.

As to the payday loans, they are supposed to cover only emergency expenses, being beneficial and necessary for these goals. Thus, it is highly recommended to have some savings and a bank account in order to avoid financial slavery and enormous fees.

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