“It’s a Last Resort. But It’s a First Resort”: A Relational Perspective of Payday Loan Use

In the United States, there is widespread use of payday loans, a high-cost credit product, among lower-income populations. Existing literature suggests that structural constraints like limited banking access or behavioral factors like lack of financial knowledge explain why so many individuals use these costly services. Yet neither explanation sufficiently captures the complexity of decision-making around using payday loans. Drawing on 40 in-depth interviews with payday loan borrowers, this study reframes payday loan borrowing as a future-oriented strategy that balances immediate financial needs, social relationships, and long-term aspirations. The interviews advance a relational account of decision-making, revealing how borrowers use payday loans to work toward an aspired future self-one that is self-reliant, with savings, good credit, and strong, tension-free relationships with friends and family. Findings highlight why individuals may make financial decisions that diverge from recognized "best practices."