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A Closer Look at Pay Day
Loans vs. Bank Overdraft Fees
According to the Los
Angeles news "many national banks are encouraging clients with
low balances to overdraw their checking accounts, allowing the
banks to avoid credit laws and collect billions of dollars in
new fees." You might now realize that pay day loans are actually
much more economical than overdraft fees from your bank. The
banks say that the overdraft programs, which cover bounced
checks and allow people to overdraw their accounts, are a
service to their clients. But these overdraft programs are
certainly a bad deal for consumers. Unlike typical lines of
credit, which charge annual interest of up to 20 percent, the
new overdraft plans charge flat fees for every processed
overdraft, translating into an annual interest rate of over
1,000 percent. Unlike lines of revolving credit, which allow
customers to repay the loans at their convenience, these plans
require clients to bring accounts back into positive balance in
only a few days. While most traditional lines of credit have
limits of thousands of dollars, the new overdraft plans have
limits of $100 to $300. After the overdraft is expended the
banks again start bouncing checks. The Los Angeles News also
states that "the rapid spread of the programs has turned
overdrafts, and the fees that come with them, into one of the
largest sources of profit for banks, according to consultants
and statistics compiled by government bank regulators.
Washington Mutual, the nation's seventh-largest financial
institution and the largest to promote overdraft protection,
charged customers more than an estimated $1 billion in overdraft
fees last year." Industry analysts claim the overdraft plans,
which contain fees as high as $35 per overdraft, are really
high-interest loans targeted at working-class customers. Unlike
pay day loans, which charge only a regulated flat fee for
providing direct cash, bank overdraft programs work
automatically with checks and debit cards. Customers often don't
even realize they have overdrawn their checking and savings
accounts until they are notified by from the bank. "Some banks
are looking at the fact that some consumers barely make it from
pay day to pay day and have a very low balance, and instead of
offering them a beneficial service, they are charging their
customers bounced-check fees to take advantage of the
situation," said Jean Ann Fox, director of consumer protection
for the Consumer Federation of America. A recent study by the
Federal Reserve last year found that banks have increased raised
their overdraft fees 24 percent from 1997 to 2001, to an average
of $20.42. That's an average of $20.42 for each individual
overdraft item! And it gets worse. Banks have sophisticated
software programs that ensure that your largest checks and
debits are processed first. This means that, if your account if
going to go negative and overdraft is required, that a higher
number of smaller transactions will each incur the overdraft
fees. Add in the average merchant penalty of $15 per returned
check, and five overdraft items for $200 could add up to almost
$375 including charges! By contrast, pay day loans for $200
would incur fees of only $45-$60. When you're caught short
between your paychecks, take a closer look before using your
bank's overdraft protection programs. It’s very likely that
you’ll find pay day loans from
American Cash Market: payday loan
will save you quite a bit of your hard earned cash over just a
10-day period.
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Payday loans in California are basically
short term loans provided by lending
institutional to customers. It is also referred in Los Angeles
as cash advance because it is cash provided. American Cash
Market assists borrowers in California in handling their
expenses until next payday. The purpose of payday loans is to
avoid expensive bounced- check fees and late penalties, and
bridge the borrowers cash flow gap between payday.
California loan term is 10-14 days. American Cash Market Los
Angeles stores successfully operating in California for more
than eight years and offer online and offline payday loans as
well as other financial services (checks cashed, money orders,
bills pay and Western Union money transfer). The single greatest
advantage of California payday advance loan is that it is
possible to get payday loan approved even if borrowers have a
bad or poor credit record. The procedure of obtaining California
payday advance is very simple and come in the form of small,
unsecured loan which means the is no collateral required. The
loan amount approved would mostly depend on income. The American
Cash Market will evaluate the amount customers can comfortably
pay on the next payday. In most cases borrowers would get money
deposited to their checking account next day or they can pick up
cash in our Los Angeles branches 7 days a week
More News:
In Defense of Payday Lending
Payday Lending:
Serving the Unbanked
Bank fees are more
outrageous than ever
Bank fees: are they rising
or falling?
HUD info on
predatory lending |
BANKS wants in
Large banks are battling their own
version of payday loans and cash advances,
euphemistically called "Overdraft Protection". The
bank gets overdraft fees, while consumer get the
equivalent to payday loan-cash advance.
This "Protection" doesn't come cheap: While American
Cash Market inc., charges Only $17.65 Per $100, bank
charges an average bounce-check fee of $22! They
(banks) process largest check first, rather than the
order in which checks were written, thus draining
your checking account faster and bouncing several
checks at ones, each signed to be a separate fee.
American Cash Market inc., can also beat banks on
service. Our payday loan and cash advance customers
does not want to stand in bank lobby behind somebody
from the business down the street making a deposit
or someone else opening a checking account.
Here
are some facts and figures on the payday loan&cash
advance business:
$48.00 - Total national average bounced-check charge,
including merchant fees
$29.56
- Average overdraft fee
$17.65
- Fee for $100 payday cash advance from American
Cash Market inc.
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