More millennials are turning to payday loans and pawn shops for much needed cash – moves that can provide immediate relief, but often result in deeper debt.
That’s according to a new study on millennials and financial literacy by the Global Financial Literacy Excellence Center at George Washington University. The study highlights just how much millennials struggle with personal finance: of those surveyed, 42 percent had used an alternative financial service, a broad term that includes auto title loans, tax refund advances and rent-to-own products, in the five years prior to the study. Payday loans and pawnshops led the list with 34 percent of respondents reporting having used them.
Shannon Schuyler, a corporate responsibility leader of PricewaterhouseCoopers, which sponsored the report, explained that while some findings in the study, like the misuse of credit cards, were understandable and perhaps even expected, it was harder to really understand the elevated rise in things like payday loans and pawn shop usage.