Payday Loan Lenders – ATM Fees – Overdraft Fees = 400 Percent APR

By | Oct 10, 2009

The payday loan industry is becoming more sophisticated and reaching deeper into their pockets in order to thwart negative payday loan legislation.

A link over at Nick’s PDL Industry Blog brought this to our attention.

Payday lenders are gearing up for an alternative strategy. The industry believes it has found new support in arguing that payday loans, with annual interest rates that can reach 400 percent, are a cheaper alternative to overdraft charges. The industry is citing a recent USA Today analysis based on data from Moebs Services, an economic research firm. According to the analysis, consumers pay an overdraft fee of $26.68 every time they overdraw their account. So if consumers overdraw by $100, they’d pay an annual percentage rate (APR) of 696%, if the credit is paid back in two weeks – compared with an APR of 450% on a $100 payday loan with an average fee of $17.25, according to USA Today.

“The focus on overdraft protection on the Hill has helped legislators to understand that payday lending can be looked at as a cheaper alternative to overdraft charges,” said Steven Schlein, a spokesman for the Community Financial Services Association, the trade group for payday lenders.

6 Comments so far
  1. Petey Payday October 11, 2009 1:26 am

    They are a MUCH cheaper alternative then bank fees! MUCH cheaper. Gov’t need to look at the banks and not payday lenders

  2. nick tuberivlle October 21, 2009 10:24 am

    read what i have to say

  3. nick tuberivlle October 21, 2009 10:24 am … see what i have to say

  4. Cash Advance Quick October 22, 2009 11:32 am

    Cash advances, popularly known as payday loans, are an ideal way to deal with short-term financial problems. Quick cash advances are approved in almost no time and the money is made available to you within 24 hours. The procedure is simple and best executed online. If you fulfill the eligibility criteria, you can get the loan and pay it back with interest on your next payday. The next payday is usually the due date for payback.

  5. Payday Loans Pro November 17, 2009 2:15 am

    Interesting read. Thanks.

  6. Jc January 20, 2010 8:11 am

    Are internet payday loans safe? I need cash, but I am worried about all the bad stories I have read about illegal companies. How can I tell if a payday loan company is legal and will follow my state laws? What do I need to look for in a good company?
    Any advice would help! thanks

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