Thursday, May 2, 2013
Bank Pay Day Loans
The banking version of payday lending, called deposit advance, is no better than its storefront cousin. For starters, the advance loan can carry an interest rate of over 300 percent. There is no fixed due date for repayment. Instead, the bank repays itself from an electronic deposit into the borrower’s account. A new study from by the Consumer Financial Protection Bureau says these transactions are anything but harmless, one-time deals. Three-fourths of the loan fees are generated by consumers who borrow more than 10 times in a 12-month period. Overdraft fees deplete the borrowers’ meager resources, causing them to borrow again and again — and pushing them deeper into the debt trap.