SOUP = Society of Oppressed Underdeveloped People. From {HERE] It takes a complex ecosystem of policies to nurture a thriving society in which everyone has the opportunity to make ends meet stress-free, to save for a rainy day, and to find additional financial support at a reasonable cost. Access to these circumstances is a big driver of our personal and family health and well-being. Yet the reality is that nearly half of American adults experience financial fragility. In other words, faced with an unexpected $400 expense, two out of five people in the United States would need to borrow money or sell something in order to cover it. One result is that every year about 12 million people in the United States turn to short-term, high-cost loans — such as payday loans. The high fees that come with these predatory loans trap many in a debt cycle. The consequences go beyond the stress of personal finances: research shows that living with financial fragility — having low income, unstable work, and no cushion for unexpected expenses — is a precursor to poor health.

The average loan amount in Missouri is $315, and a lender can charge up to 1950% APR on that amount.

This is especially true in Missouri, where use of payday loans is twice the national average and where lending laws are among the most permissive in the country. In this report, we focus on understanding the landscape of payday lending in Missouri and how payday lending impacts the health of individuals, families, and communities.

The Presence of Payday Lenders in Missouri Is Deep and Broad

As of May 2018, there were 600+ payday lending storefront and online licenses issued across 91 of Missouri’s 114 counties and the independent city of St. Louis. The seven most populous jurisdictions have the greatest number of payday stores, representing one-third of all stores in the state. While communities of color and urban areas have a disproportionate share of lenders, White and rural neighborhoods have them as well.

People Turn to Payday Loans Due to Low Wages and Financial Exclusion

Low wages and exclusion from financial institutions are root causes that lead people in Missouri to use payday loans. While less than 1% of borrowers are unemployed, the average income of borrowers is only $24,607, and nearly one in four Missourians is “unbanked” or “underbanked.” Missouri’s minimum wage (which will gradually increase) is $8.60 an hour, among the lowest in the country.

Payday loans exacerbate financial stress by increasing the likelihood someone will miss bill payments, delay health care spending, or use food stamps, or even file for bankruptcy.

People Turn to Payday Loans Due to High Costs of Housing, Medical Debt

Research shows a two-way relationship between debt and health: heavily indebted, low-income people are more likely to have poor health, making it harder to hold on to a job. On the flip side, being able to finance immediate debts greatly raises the odds of good health.

We found that the 10 Missouri counties with the worst health rankings have a much higher density of payday lenders than do the 10 counties with the highest health rankings. Unsurprisingly, focus group participants overwhelmingly reported physical and mental health effects from the experience of using payday loans. They also reported their children and family members being adversely affected by the payday experience.

While payday lenders are located throughout Missouri, their presence is disproportionately experienced among people of color and urban residents[

Table 1 indicates that the three 17 HumanImpact.org/paydaylendingmo jurisdictions with the largest number of payday lenders (Jackson County, St. Louis County, and the independent city of St. Louis) have the three largest non-White populations in the state (35%, 32%, and 52%, respectively) and represent nearly a third of the state’s population. According to the Missouri Department of Health and Senior Services, these three geographic areas account for 78% of the total Black/non-Hispanic population in the state of Missouri and the largest population of Hispanics (MDHHS, 2016–2017).

These Missouri data align with national data that storefronts, practices, and advertising disproportionately target communities of color (notably African Americans more than Hispanics), lower-income people, renters, and people with lower levels of education (Gallmayer, 2009; Barth, 2015; Prager, 2009). Indeed, the Ferguson Commission cited the impact of predatory lending on Missouri’s black residents (Ferguson Commission, 2015).

And although a Pew survey showed that the majority of payday loan borrowers (55%) were White, they were less likely to have used a payday loan than people of color. Specifically, 12% of African American respondents and 6% of Hispanic respondents had used a payday loan, compared with 4% of White respondents (Pew Charitable Trusts, 2012).

Payday Loans Capitalize on People’s Vulnerabilities People in St. Louis and Springfield who participated in our focus groups described in great detail the predatory nature of lender practices in Missouri. They felt that lenders misrepresented loan terms, manipulated contracts, demeaned them in the process, and used harassing practices to collect repayment. Many participants said that lenders offered them the option to apply for a second short-term loan to pay for an initial loan. [MORE]