New study shows how many Houston-area neighbors are relying on high-cost payday loans

New study shows how many Houston-area neighbors are relying on high-cost payday loans

Nick Natario

Mon, February 9, 2026 at 11:52 PM UTC

2 min read

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A new study shows how many Houston-area neighbors are relying on high-cost loans, which researchers said could be setting people up for failure.

When it comes to borrowing money from payday businesses, Kinder Institute at Rice researchers were surprised at the results after talking to nearly 5,000 Houston-area neighbors.

"We are definitely higher than the rest of the nation," Kinder Institute for Urban Research at Rice University's Dan Potter explained. "That's one of the things that took us wanting to double and triple check some of those numbers."

The study shows nearly one in five, or 19 percent, of Houston-area neighbors needed money within the last year from a high-cost loan service. The national average, they said, is around five percent.

These are places where the money you pay back is much more than what you borrow. In some cases, the study found interest rates could reach as high as 600 percent.

"Unless you have those funds immediately coming into yourself, you are being set on a path; the fees and the interest rate are going to trap and catch you, and that's where that notion comes where they're set up to fail," Potter said.

An issue researchers found is impacting Black and Hispanic families more than white and Asian families. The reason why they said could be because of where these businesses are located.

"Part of this is a reflection of where are these things located, and part of it is a reflection of what is available to people who are needing that type of bridging the gap from one month to the next," Potter explained.

The Better Business Bureau said if you need one of these loans, make sure you understand how it works, read the details, and ask about fees. Money researchers said Houstonians need these loans for items like food, housing, medicine, and other unexpected expenses.

"We are not talking about people that want to go on vacation," Potter explained. "We are not talking about people who want a new stereo or whatever. We are talking about people who are trying to make themselves whole."

Researchers said policies to cap the interest rates people pay can help with this issue. In fact, the City of Houston has regulations on these businesses.

However, researchers found it can be hard to enforce. That's why they say the state could do more.

The study shows some states have regulations to cap these services. That's not the case in Texas, where researchers said these companies can charge whatever interest rate they want.

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