Monday, April 02, 2007

Predatory Lending, What About Banks and VISA?

Annual percentage rate (APR) on a 2-week payday loan = 390%.

APR on a VISA or Mastercard credit card with late fees = 700%.

APR cost of a bounced check at a commercial bank = 1,300%.

Congress and many state legislatures are now promising a crackdown on the "payday" loan industry for "unscrupulous" and "predatory" lending. But if payday lending is such a consumer rip off, no one has explained why these stores have become so popular. There are some 25,000 payday stores across America, and in many small towns the payday loan store is now as commonplace as the local post office.

This looks like another illustration of how to hurt working Americans in the name of helping them.

From today's WSJ editorial "Mayday for Payday Loans."

3 Comments:

At 4/02/2007 2:31 PM, Anonymous Anonymous said...

Go back to Soviet Russia if you hate capitalism so much!

 
At 4/02/2007 4:43 PM, Blogger ultralame said...

A little unfair to group in late fees and bounced check fees in there, isn't it?

What would you charge your employer if they were late with your paycheck?

I agree that changing the terms on a loan due to a late payment is nasty, but fees for failing to pay according to schedule are perfectly acceptable.

 
At 4/30/2007 8:19 PM, Anonymous Russell Rivers said...

Banks and credit cards should be looked at to for all the charges and fees they tack on. While title/payday lenders are getting all the heat simply for making loans in small denominations, banks and credit cards are up to no good. They ignore low income families and yes, they have fees and markups that even subprime lenders see as unfair. Yet banks can breathe a sigh of relief as the subprimers foot the bill.

 

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