Banks Payday Loans
March 8, 2012 by staff
Banks Payday Loans, Some of the nation’s biggest banks are offering short-term loans with sky-high fees that consumer groups say are just as predatory as payday loans.
Wells Fargo (WFC, Fortune 500), U.S. Bank (USB, Fortune 500), Regions (RF, Fortune 500), Guaranty Bank and Fifth Third Bank (FITB, Fortune 500) are among the banks offering these loans through direct deposit checking accounts, marketing them under such names as Checking Account Advance and Ready Advance loans.
Consumer advocates say these advance loans are just as bad as payday loans because they carry steep fees that borrowers often can’t afford to pay back by the time the loan is due, a date that typically coincides with the delivery of their next paycheck or government benefit payment.
Like payday loans, the banks’ advance loans are typically made for two weeks or a month. But instead of using a post-dated check or accessing a consumer’s banking information to retrieve payments like payday lenders do, the bank pays itself back directly from the customer’s checking account when they receive their next recurring direct deposit.
Consumer groups argue that when it comes time to pay back the advance, many customers need that incoming deposit for other expenses and can’t afford to pay back the loan and fees — prompting them to take out another loan and extending the cycle of debt.
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