Analysis by Allison Morrow, CNN Business

Most people are, understandably, rather grumpy about surging prices of gas, food and just about every essential item you can think of.

There’s at least one industry dancing on the grave of our expendable income, however: predatory payday lenders.

Here’s the deal: Payday loans, aka cash advance loans, are the kind of short-term bridge that can feel like a lifeline when you’re living paycheck to paycheck. But they come with criminally high interest rates, often over 500%, depending on your credit and income. And our current economic climate — marked by high inflation and low unemployment — is just the kind of environment where these lenders thrive, my colleague Nicole Goodkind writes.

One subprime lender, Enova, said in an earnings call recently that 44% of all the loans it issued last quarter were to new customers. That’s… astonishing.

Buy now, pay later is the latest rage – here’s why it may be dangerous

What’s happening

But it’s also easy to see why people are getting desperate:

  • Inflation in the US is the highest it’s been in 40 years.
  • Gas is hovering around $5 a gallon, more than 60% more expensive than it was a year ago.
  • Bosses across America are calling workers back to the office, which means more driving.
  • The federal minimum wage, meanwhile, still stands at $7.25 per hour, where it’s been since 2009.
  • About two-thirds of Americans live paycheck to paycheck, one survey found. (That number jumps to 82% among workers earning less than $50,000.)
  • People with subprime credit scores (below 650) have a hard time getting a loan through a regular bank or qualifying for credit cards, leaving them with few options when cash is tight.
  • To hear the predatory lenders tell it, they’re providing service to low-income communities by issuing loans to people whom traditional banks have turned away. The high interest rates are necessary because of the risk of default.

Consumer advocates call BS.

“There are 18 states and the District of Columbia that have banned payday loans and have survived just fine without these predatory lending products,” said Nadine Chabrier, senior policy counsel at the Center for Responsible Lending. “There are fair and responsible lending products that have low interest rates and fees that are available and that people can use.”

Read Nicole’s full story here.

The-CNN-Wire™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.