Ohio Banks Offer Payday Loan Product Legally!

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 $$$.

Comments ( 6 )
  • admin says:


    Great Post! I agree with many of your observations.

    Our major point is simply that consumers deserve to have as many financial product choices as possible. We do not think government should interfere with the products offered.

    That is not to say government has no role in the financial products arena. We prefer government insist on and enforce FULL DISCLOSURE of fees, APR’s, remedies, etc. in plain English. Once this is accomplished the payday loan consumer, the car title loan consumer, the credit card consumer, the credit union consumer, the check cashing consumer the rapid advance loan consumer… should each have a choice in determining exactly which product best serves their situation.


  • Arthur Thomas says:

    I believe the reasons payday loans(and car title loans, refund anticipation loans, and finance companies like rent-to-own and Cashcall) exist, is because we don’t know how or don’t care about spending less than what we earn or get, controlling our spending and gambling habits. People should learn or make it a habit to save 10, 15, 20, or if possible 50 percent of thier weekly/biweekly/or monthly net income or monthly Social security benifits for a emergency, rainyday fund, vacation, or big ticket item.

    Credit cards are better than payday loans, but we should beware of some credit card companies that take advantage of low income people with a lack of credit history or credit problems, who are struggling to make ends meet.

    If you have no credit history or cleaned up your bad credit(and learned your lesson of course), Captial One(and tiny fraction of all credit unions)have unsecured major credit cards with a very low or no annual fee. The credit limits are low such as $250 or $300, which is good.
    I believe payday lenders are finding some of thier stores’s business phunging because people are learning to live within thier means, and competition from banks like Capital One and a tiny fraction of all credit union.

    There are a few credit unions that are for the underserved population. If someone tells you that all low income people can’t manage thier income, then they are telling you the half truth and half lie. Some low income people can skillfully budget thier money. Payday lenders and subprime credit card companies charge high interest and fees, because they wouldn’t barely making enough money on a low credit limit or small loan amount.

    I wish there where more credit unions like North Community Credit Union in Chicago and Unitus Credit Union in Portland, OR.
    On the following link, watch and hear how North Side Credit Union resuced this young lady from the payday trap.


  • payday loan says:

    In that I agree we you, if is no legal for the payday loan industry to charge those rates, why is ok for the banks to charge that interest anyway? they should regulate the banks too, with the return check fee’s, if you do the math, what they charge for it, is a lot more… If you bounce a check for $10 my bank will charge me $34.00 this are the number that people dont see.

  • Steve says:

    Frankly, it’s disappointing that banks are able to continue offering their version of the payday loan product in states like Ohio where voters have spoken and tried to end predatory lending. Ohio’s new law caps interest rates on payday loans at 28% APR and the intent of the law was to reform a defective and predatory product that is designed to trap borrowers in debt. It’s a bad product regardless of who is offering it. I hope that legislators consider looking at legislation to regulate the payday lending activity of banks as well.

  • Clint Says says:

    Same old story. Big guys survive and the small business owner gets smashed. What a joke. In the end, the consumer will pay more for fees once the payday lenders are gone.

  • payday loans says:

    I think payday loan are a great resourse it a shame some states have done away with them.

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