Payday loans go mainstream
What’s the next big thing for big banks? Payday loans.
And, according to industry analysts, it’s only a matter of time before the federal government will have to figure out what to do when they become one of the hottest, and most controversial, products in banking.
Four big banks are now offering short-term “payday loans” to customers who have their paychecks, Social Security, unemployment or disability checks deposited directly into their checking accounts.
A report from the National Consumer Law Center states these loans, like payday loans, won’t be cheap.
“Recently, Regions Bank became the fourth large bank to start offering 300% APR or higher payday loans, following Fifth Third, U.S. Bank and Wells Fargo,” the report reads. “Fiserv and other bank consultants are encouraging banks to offer payday loans as a way of augmenting overdraft fee income.”
The report predates Bank of America’s September announcement of its debit card fee and the ensuing national protest, Bank Transfer Day, Nov. 5, which encouraged customers of large banks to move their accounts to local banks and credit unions.
Fifth Third bank, Regions and U.S. Bank offer, for example, a $400 loan for $40 at an APR of 365%, according to the NCLC. The loans are short-term – less than two weeks – but with “triple-digit interest rates disguised with fee-based pricing.” However, the banks are clear on their FAQ sections that consumers’ checking accounts must be in good standing and that the loans should be a last resort because they are expensive.
Still, for the poor and elderly, who might have trouble meeting their financial needs, these loans could be tempting. The large-bank loans are not subject to protections for Social Security, disabled and unemployment benefits that ensure creditors cannot take income needed for food, rent and medicine.
The Center for Responsible Lending states that because the interest rates are high, and the entire principal is deducted on payday, it forces most customers into “a long-term cycle of borrowing that systematically strips them of their funds.
social security payday loans - News
Four big banks are now offering short-term “payday loans” to customers who have their paychecks, Social Security, unemployment or disability checks deposited directly into their checking accounts. A report from the National Consumer Law Center states
With over 24 million unique Social Security Numbers, Clarity Services provides powerful reporting products on under banked, subprime, thin file consumers with real-time consumer data to facilitate fraud detection, risk management and more.
Obama has been pushing Congress to extend and expand the payroll tax cut, which lowered the employee portion of the Social Security payroll tax from 6.2 percent to 4.2 percent for 2011. The tax cut is set to expire Dec. 31. At a Dec.
Outside a check cashing store near Bay Fair Center, Charlotte Whitaker said she paid a $20 fee to cash her $840 Social Security disability check because she didn't have a bank account. "But I never borrow money because I know I couldn't pay it back,"
Nearly 25 percent of the transactions occurred with Social Security recipients. Further, older customers were 2.6 times more likely than others to use this type of loan. If you're thinking that this loan sounds like a street corner payday loan,
Why Do People Go For Payday Loans? | Bigger Bank Account
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It is a fact that the country is facing an economic recession. Thus, you should not wonder why there are so many people who are in search for financial loans that require no collateral loan except for paychecks and your good credit score. No collateral loans are unsecured financial loans, and the lender does not have the assurance that the debtor will repay the loans; thus, it is sometimes called as risky proposal.
However, with regards to payday loans, this is not the case. Although, only the next paycheck, that is used to pay for the interest and the principal amount, still lenders don’t have to worry if whether or not the debtor can pay. Well, this is because of the fact that the payday loan lenders required the debtor to give them a postdated check that can be encashed a day after payday. This type of loan requires the Social Security Number, Tax identification Number, stable job and lower limit income.
In spite of the high amount of interest rate for this type of loan, many people still opt to avail it. Well, this is because of the fact that it does not require lots of paper works, and it provides the debtor a quick loan. Other than that, these quick payday loans allow many people have come to pay their utility bills and have survived medical emergencies. Hence, it is no wonder why people see this as a solution to their problem despite the high interest rates that it gives the debtors.
If you want to avail this loan, you don’t have to look far. There are lending institutions that have online payday loans. Unlike those applied in the office, online payday loans do not require you lots of paper works, and added to that there are online lenders that do not check your credit history. Thus, if your credit history has been marked low because of the recent economic crisis, then online payday loan is godsend.
However, please be aware though that getting into such loans could lead you to be overwhelmed with debt. Thus, as much as possible, do not apply for these loans if you are not in dire need of money. Also, the best way for you to avoid getting caught up with financial loans every payday, save few dollars from your paycheck. Doing so will help you prepare for any financial emergencies that might come your way.
RT @: student loan garnishment of social security 
RT @: student loan garnishment of social security 
RT @: student loan garnishment of social security 
RT @: student loan garnishment of social security 
RT @: student loan garnishment of social security