QoD: Which business has the most physical locations in the U.S.: McDonald's, Payday Lenders or Starbucks?

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Apr 07, 2019
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Question of the Day, Financial Scams, Behavioral Finance

Hat tip to Beth Tallman for the idea for this question of the day. 

Answer: Payday lenders

Questions:

  • Based on this information alone, do you think that payday lending is a good business for the lenders? Explain.
  • Payday loans carry interest rates as high as 600%. Why do you think that people continue to borrow from payday lenders despite these interest rates?
  • What financial advice would you give to someone who finds themselves taking out payday loans on a frequent basis?

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (from NPR):

MANN: The number of payday loan stores is about the same as the number of McDonald's.

VANEK SMITH: Actually, there are more payday loan stores than McDonald's or Starbucks. There are nearly 18,000 payday loan stores in this country right now.

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About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.