Big Banks believe in “payday like” Loans?
With so many consumers being really strapped for cash, and banks trying to find additional revenue, some banks are offering an alternative type of loan which appears to be like a payday loan. As we all know, payday loans are issued by payday lenders, not necessarily our local banks. However, Tennessee’s Fifth Third and U.S. Bank are offering 35 day payday advance loans. According to Nashville Business Journal, “The loans come with an annual percentage rate of 120 percent, or a 10 percent fee on money borrowed. That’s a rate much higher than almost any other form of credit, other than businesses that offer pawn, title or unsecured payday loans, which often charge fees as high as 400 percent APR.” So my question is, is this the beginning of banks now offering payday loans? Will they have to go through the same regulations as the payday lenders are having to go through?
Brick and mortar payday stores, online payday lenders and others that deal with payday loans are facing more and more regulations these days. Will our nation’s top 10 banks now be on that list of those being faced with the payday loan regulations?