Chester P. Dexter

Payday loans now available at the local bank

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I've been watching with interest to find out how the credit and banking landscape is changing with new regulations in place. Similar to the debit card / payday loan operation in the thread, "For those who don't like banks," actual banks are now getting their piece of the payday loan action.

http://www.bloomberg.com/apps/news?pid=20603037&sid=a25EweZDVeAU

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The article doesn't mention the aggregate amount of these fees, knowing most readers can't/won't do any math... 100% APR on a $100 loan for 3 months is only $25.00, or less than the cost of one overdraft charge.

Sensationalized journalism has taken the place of real reporting. A few years ago that article would have read, "Only two banks offer good alternative to costly overdraft fees". Today, the same article essentially reads, "Some banks are offering overdraft protection services akin to payday loans". [FWIW, many banks have faced public criticism for not offering Wells Fargo's direct deposit overdraft protection... this is something customers scream for and the product was created out of demand]

If you're a bank these days, you're damned if you do and damned if you don't.

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I never pay attention the APR in articles like that; I just calculate the cost out myself. I know that quoting the APR in a single transaction can be "spun" to sound terrible (like the way I had a tiny credit on my Macy's bill this month, and they tacked on the minimum $2.00 finance charge - why I owe it during a month I don't owe a balance, I'm not very clear on, but it might have to do with the fact that I briefly owed a balance before I returned an item for credit)

Anyway, my point was that the $2.00 interest I had to pay could be quoted as some very high APR when I know that really it was only a flat $2.00. All I know is I owe $0.51 and I'd better pay it now before I forget, lest late fees be tacked on.

Whose fault would that be, if I forgot and whopping fees got added ... MINE ! I really can't get over the constant whining and griping I see on this board and everywhere as if the big bad wolf were out to get us at every turn. And we're the defenseless little Red Riding Hood. I was the one who chose to order a coat, I realized it fit no one in the house and I took it back for a refund after having made larger than needed payment; it's my job to monitor my bill.

(Now that I think of it further, I'm still scratching my head on why I was charged $2.00 when I had only a credit; but I have bigger fish to fry and I simply don't care about two bucks enough to make a federal investigation out of it.)

Anyway, back to the banks... I don't blame them for offering these services. I think those who take advantage of those services should consider themselves accountable. If the services were disadvantageous enough and people realized it, they'd become unpopular and would cease to be offered. There are occasions in which a short-term loan could save someone's a$$ and I don't see the fee as unreasonable.

This is kind of like dessert. I'm going to eat it now and then, and it's my business. If I ate cheesecakes all day and all night and tripled my weight, it would not be the dessert manufacturer's fault - it would be mine. Not a good analogy, but personally, I like the fact that a variety of financial products are available because there have been and still might be times when I'd pay a steep fee for a short-term loan. I realize they can contribute to the downfall of certain individuals, but really, these people had pre-existing problems. Where the line should be drawn between freedom of choice and protection from abuse is not something I have the answer to.

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I never pay attention the APR in articles like that; I just calculate the cost out myself. I know that quoting the APR in a single transaction can be "spun" to sound terrible (like the way I had a tiny credit on my Macy's bill this month, and they tacked on the minimum $2.00 finance charge - why I owe it during a month I don't owe a balance, I'm not very clear on, but it might have to do with the fact that I briefly owed a balance before I returned an item for credit)

It's likely "trailing interest". I wrote about that in this post

This is kind of like dessert. I'm going to eat it now and then, and it's my business. If I ate cheesecakes all day and all night and tripled my weight, it would not be the dessert manufacturer's fault - it would be mine. Not a good analogy, but personally, I like the fact that a variety of financial products are available because there have been and still might be times when I'd pay a steep fee for a short-term loan. I realize they can contribute to the downfall of certain individuals, but really, these people had pre-existing problems.

Right. These sensationalized articles should instead be written that too many people misallocate their resources and don't bother to balance their checkbooks. However, nobody wants to read about that. If you're a writer looking to capture more readership, it's a lot easier to start comparing retail banks to payday lenders...

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One thing to note. Here in Wisconsin, the payday loans can be 400% or 500% or more. A 100% bank payday loan is cheap by comparison. Still not good, but relatively better.

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Yes, but I think what many are saying is that APR is worthless. If it takes me 20 minutes to process loan papers for a $100 loan I provide you today in exchange for $120 paid back 7 days from now, that would seem fair right? I mean, I would have to be paid for my 20 minutes of time, the heat or A/C, the rent of my building, the risk of your default (very high with payday loans), and the time value of the money. Most people would probably even say that $20 isn't nearly worth it. But the APR of that loan is 1040%. APRs are ridiculous. When you annualize short term loans of small sums of money, which virtually all payday loans are, even reasonable fee schedules appear to be absurdly high.

Nobody is saying payday loans are great products. But when your back is up against a wall, it can financially wise to use it if used properly. The problem is most people use payday loans as a last ditch effort to mask other larger problems, unfortunately. So what you have here on this site reflects society in general- there is a split between those who prefer individual freedom to choose and those who prefer nanny state protections from anything that the government deems to be potentially dangerous.

I noticed Montel Williams is doing television commercials for a payday lender now. I would of thought he knew better. I guess this guy is pretty desperate.

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they are not a scam as long as they tell you the amount you will be expected to pay back. The interest rate is extremely high and the prey on the people living paycheck to paycheck, but it's legal.

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This kind of loans is very convenient for those with bad credit because there are no credit checks, and the only security document that the lender needs to see is a copy of your pay-slip.

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I also heard about this in a magazine and i don't remember its name but i am pretty sure that the article is much about this topic.I find it really interesting as this has given an ample opportunity for the people who can take loans on the day trading business as well.

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