There is an informative article over at pdlindustry.blogspot.com and at Port Clinton News Herald regarding payday loan type products offered by banks in Ohio; Wells Fargo, U.S. Bank and Fifth Third out of Cincinnati.
It’s interesting to note that after the defeat of the Ohio payday loan initiative banks continue to offer a payday loan type of product legally.
A customer can get an advance for up to 50 percent of their regular monthly direct deposits up to $500 for a fee of 10 percent – a maximum of $50. The APR on this type of loan could easily exceed 400% depending on the number of the days the loan is outstanding!
Julia Tunis Bernard, a Wells Fargo spokeswoman, said the bank has offered its product since 1994.
“Direct Deposit Advance service is available to customers with established Wells Fargo checking relationships and recurring direct deposits,” she said. “It is designed to help customers get through an emergency situation – medical emergencies, a car repair, emergency travel expenses, etc. – by providing short-term credit quickly. It’s not intended to solve longer-term financial needs.”
I wonder if she copied that verbiage off a payday loan web site?
While Wells Fargo, U.S. Bank and Fifth Third all offer their advances for periods up to slightly more than a month, their policy is to automatically pay themselves back upon the first direct deposit of $100 or more.
So if you borrow $200 three days before payday because of an unforeseen emergency, the bank would take $220 upon direct deposit.
Actually, this 10% rate is the same as the payday loan legislated rate mandated in Florida!
I guess payday loan companies simply need to beg for help from Washington D.C., join the ranks of the banks, and join the pig trough for TARP $$$.