Mainstream Banks Embrace Payday Loans

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According to a consumer watchdog group, Mainstream banks are increasingly offering products similar to payday loans — short-term, high-interest loans secured by a pending paycheck — which has led the U.S. Center for Responsible Lending to call on the Office of the Comptroller of the Currency to stop the practice. The Center claims banks are giving customers advances on their paychecks, typically for a fee of $10 per $100 borrowed, which translates to an annual percentage rate of 120 percent or higher, if repaid in under one month. They said, “These products ensure that many borrowers will end up trapped in cycles of debt.” If other states would follow the example of North Dakota and start their own state banks, we could put this entire practice - along with so many other sleazy banking practices - out of business and serve the needs of our citizens.

Thom's picture
Thom
Joined:
Jul. 31, 2007 3:01 pm

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My own bank offered me this type of account...a covering of any overdraft at a rate of $20 per $100 payable within 30 days..

Interest is an extraction from the production/distribution economy. It siphons purchasing power from consumers....and places it in finance where it goes round and round trading financial paper....inflating paper assets. It creates bubbles. Bubbles pop.

The effect of high interest rates on the economy is similar to layoffs. It reduces over-all purchasing power.

Retired Monk

"Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm

I love dealing with a credit union instead of this crap.

DRC's picture
DRC
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Jul. 31, 2007 3:01 pm

The beauty of this country is that we don't have to borrow from a bank that offers less than favorable terms. There are plenty of lending options.

I don't borrow against paychecks, borrow more on a CC than I can pay back in a month, or spend more than I can afford.

Pawn shop have crappy loans also. I wouldn't shop there for money.

slabmaster
Joined:
Apr. 1, 2010 10:12 am

You lucky guy. There are many who live where there are no banks or credit unions, and in order to eat or stay in their homes they have to scrounge for the extra bucks. God help them if anything breaks, if they get a traffic ticket or if their kid gets sick. If they get sick they just suffer through.

They are not less moral, less hard-working or less-deserving than you, or me. If we had to go stand beside the population struggling to make it on less than enough, we would not be the first in the class. Either of us.

I am glad you have the options of where to shop for your financial services. If you have the means to enjoy life, great. But it ought to make you more compassionate about those who do not have what you do. Why the resentment? Was it that much hell for you to succeed and have the good life?

DRC's picture
DRC
Joined:
Jul. 31, 2007 3:01 pm
Quote DRC:

You lucky guy. There are many who live where there are no banks or credit unions, and in order to eat or stay in their homes they have to scrounge for the extra bucks.

This thread is about banks offering payday loan type products to consumers. If those people you speak of don't live where there are banks, what would this topic have to do with them?

God help them if anything breaks, if they get a traffic ticket or if their kid gets sick. If they get sick they just suffer through.
God help them. Kids getting sick is no fun for anyone. getting sick sucks. Traffic tickets can be avoided.

They are not less moral, less hard-working or less-deserving than you, or me. If we had to go stand beside the population struggling to make it on less than enough, we would not be the first in the class. Either of us.
What does any of this nonsense have to do with banks making payday loans? FYI, I've been broke and not had enough money to pay my bills etc... It's a situation that I focussed on to overcome. If I lost everything tomorrow, I would strive to not remain in poverty. We have choices and fortunately, we live in a country where people can overcome adversity. Making bad borrowing decisions is the responsibility of the borrower.

I am glad you have the options of where to shop for your financial services. If you have the means to enjoy life, great. But it ought to make you more compassionate about those who do not have what you do.
There are various lending institutions in most every town in America. If those are not satisfactory, shop across town, next town, or next state via on-line or correspondance. Credit cards can actually be managed as a lending tool if one has an ounce of financial dicipline and anyone can get one. Enjoying life has never revolved around having "the means" for me. I enjoy life whether I have money in the bank or not. I have found having experienced both sides of the equasion, having more money allows more opportunties both for myself as well as my family. It's worth the effort IMO. What I do enjoy is the striving and hard work to accomplish results. To insinuate that I have no compassion for others is a strange regurgitation of rehtorec. How would you know what I do or what compassion I have? If I had none, I surely wouldn't send off over 100K yearly to several charities for the homeless, donate tens of thousands yearly in construction projects for those that can't afford it and do need it, sponsor charity drives, clothing drives, food drives, etc... It's just something we've always done. True compassion to me is lifting people through the expectation that they have to drive their life for a change. They have to make it happen. I expect them to do it, not stand around with their hand out claiming how tough they have it, or crying a goddam river because lifes not fair. The benificiaries are the ones that would feel insulted if I felt sorry for them,

Why the resentment? Was it that much hell for you to succeed and have the good life?
I have zero resentment towards anyone. Resentment is a feeling that I don't think I've felt since I was a kid. Maybe when that guy in high school got a date with a girl I was interested in, but I can't think of anything in the last 35 years. Thats more a teenage jelousy thing anyways.

I don't believe empowerment comes from treating people like they are imbeciles. Creating a weakling that cannot feed himself does not show compassion. It is a dis-service to humanity. Not sure what you mean by "hell" and I'm not sure what "the good life" is. When I get there, I'll send a postcard. I'm not sure what your definition of "suceed" is either. Again, in my world there is no finish line. I just focus and drive forward, always. Do I prioritize what I want to accomplish and work towards it? Yes. Do I make mistakes and land on my head occasionally? Absolutely. Do I sit around and whine about problems expecting someone else to come and save me? I've never really considered it nor had the time. It's gotta be a weird mindset though. Sounds like a complete waste of valuable time.

slabmaster
Joined:
Apr. 1, 2010 10:12 am

The working poor don't have the luxury of "shopping for loans". When the car breaks down and needs fixing to get to work, the only sure loan is a usurious loan.

Of course, if the U.S. had more equitability in pay, perhaps they'd have a small savings to fall back on. When our min wage was $5.25 an hour...the Irish one was $9.50.

High interest rates have the same effect as business closings and layoffs...they reduce consumer purchasing power....they slow/limit the production and distribution of goods/services in favor of financial paper. In economic terms, high interest rates favor the "rentier class". Banksters aren't called banksters for nothing

Interest rates that are common today used to be illegal.. 15% interest on a credit card would get a bankster a jail sentence in my younger years. At current rates, I suppose they'd have locked 'em up and thrown away the key to the cell.

We've changed dramatically from our early history....of course, the banksters weren't in charge then.:

Early 18th century: American colonies adopt usury laws, setting the interest cap at 8%..

After 1776: All of the States in the Union adopt a general usury. Most states set the interest limit at 6%.

http://www.affil.org/consumer_rsc/usury2.php

Government of, by and for the people worked pretty well...for the people.

Retired Monk

"Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm

A guy with a car could sell it and get a one way ticket to Ireland and live in the lap of luxury. Dang, $9.50....what more do ya need?

Credit cards are not a long term loan. Too many people use them like that and more often than not, have finacial trouble. It's a bad way to borrow for more than 30 days.

Financial discipline must not be taught in school. It sure isn't popular anymore. Once fed by the all mighty dole, people come to expect that they are not responsible for anything that happens to them. "It's not my fault" seems to be the new cultural battle cry.

slabmaster
Joined:
Apr. 1, 2010 10:12 am

Dang, I hate repeating myself when someone doesn't really address a post:...a post focused mostly on usury...fed by wages so slow savings is an impossibiity.. Is the topic learning financial discipline..or Usurious loans?

Until 1979, loan laws provided some interest rate cap in every state. Then everything changed. Governments and banks put profits before people. And now the lending industry is spiraling out of control.

---------

We've changed dramatically from our early history....of course, the banksters weren't in charge then.:

Early 18th century: American colonies adopt usury laws, setting the interest cap at 8%..

After 1776: All of the States in the Union adopt a general usury. Most states set the interest limit at 6%.

http://www.affil.org/consumer_rsc/usury2.php

Government of, by and for the people worked pretty well...for the people. Government of, by and for the financial industry works pretty well...for the financial industry. "...the finance industry has effectively captured our government" - Simon Johnson, former Chief Economist, International Monetary Fund.. http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

Retired Monk

"Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm
Quote polycarp2:

Dang, I hate repeating myself when someone doesn't really address a post:...a post focused mostly on usury...fed by wages so slow savings is an impossibiity.. Is the topic learning financial discipline..or Usurious loans?

It's both.

Usurious loans don't affect those with an ounce of common sense and financial discipline. Put them out of business (if you'd like) by not buying their product. They can only sell you a shit deal loan if you are willing to sign the paper.

slabmaster
Joined:
Apr. 1, 2010 10:12 am

I got a pay-day loan six years ago and in the fine print was a bank's name located in Delaware. It was this bank that approved my loan. Banks probably have been involved with this business from the beginning.

rowdyliberal
Joined:
Jul. 31, 2007 3:01 pm

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