Paige Marta Skiba, a law professor at Vanderbilt Law School, responds to our May cover story on shrinking middle-class wealth:
The problem is not just high interest credit cards. In the last two decades, Americans have experienced a meteoric rise of alternative financial services like payday loans, installment loans and auto-title loans. As an economist, I’d like to think this increase in choice of credit products is a good thing, especially for your typical borrower—a middle-class worker without savings or many traditional options for borrowing after a few credit hiccups.
But because we forget to pay on time, we procrastinate and we fail to predict the predictable shocks to our budget, more credit options can mean more trouble.