Payday lending has long been a controversial topic in the financial industry because of both who the financing targets and the costly terms usually associated with it.

About 12 million people - 5.5 percent of all Americans - take out payday loans every year, averaging eight loans of $375 each time, according to new research from the Pew Charitable Trusts. The combined $3,000 on those eight loans also costs them an additional $520 on interest annually.

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In general, most consumers who tap payday lending to finance various aspects of their lives are white, female, and between the ages of 25 and 44, the study found. Other demographics more likely to take out payday loans are those without a four-year college degree, those who rent homes, those earning less than $40,000 per year, those who are either separate or divorced and African-Americans.

Borrowers typically obtain these payday loans to cover regular living expenses - 69 percent used them to cover utilities, credit card bills, food, or housing bills - rather than for an emergency expense, the report said. Only 16 percent of borrowers used them to finance unexpected medical or auto repair expenses. On average, people taking out this type of financing carry debt for roughly five months of every year; the typical borrower's eight loans usually last 18 days each.

And it seems that having payday loans as a source of financing may lead borrowers to avoid financial tactics that could help them improve their situations in the long term, the report said. Among those who tapped this type of credit, 81 percent said that if they did not have access to payday loans, they would cut back on expenses. However, large numbers also said they would put off paying bills, borrow from friends and family members, or sell possessions. Just 44 percent would seek financing from a bank or credit union, 37 percent would use a credit card, and 17 percent would borrow from their employer.

Payday loans are often criticized as being hazardous for consumers because of the high interest rates involved and the requirement that they be paid back in a relatively short period of time.

Image: PinkMoose, via Flickr