Pandemic government assistance may have helped some Californians avoid using expensive payday loans last year, but some experts say it might be too early to celebrate.
A new report found that in 2020, California saw a 40% , a drop equivalent to $1.1 billion. Almost half a million fewer people didn’t rely on payday loans, a 30% drop compared to 2019.
Despite the unprecedented job loss triggered by the pandemic last year, government-funded financial aid was enough to acutely impact the payday loan industry, according to the California Department of Financial Protection and Innovation. The new state department released the report last week as part of its ongoing effort to regulate and oversee consumer financial products.
The report comes on the heels of California’s new $262.6 billion budget, with multiple programs aimed at reducing economic inequality within the state. An unprecedented $11.9 billion will be spent on Golden State Stimulus payments, a one-time benefit not set to continue in years to come.
“With those benefits going away, we do expect there to be potentially an uptick (in payday loans),” said department spokesperson Maria Luisa Cesar.