Re: Banning Payday Loans is No Bargain

Murray — Wed, 12 Mar 2008 15:09:47 -0000

Loan Sharks and Predatory Lenders have been used to describe Pay Day lenders because of the 3 or 400% APR charged on a $100.00 loan, for a fee of $15.00.

BUT what about a
15 day loan with an APR of 42,583.33%
Thank you Bank of America.

How can this be, you ask. Let me explain. My son has an account with Bank of America and went to a merchant to purchase an item using his debit card, for $3.50, but only had $1.50 in his account.

So as a convenience the bank allowed the debit card transaction to be approved, creating an overdraft of $2.00 for a small (ya right) service fee of $35.00.

My son did not ask for this service, in fact when we opened his account, I Specifically asked the bank employee NOT to allow this to ever happen. I would rather have my son turned down for not being able to manage his money, than to have the Bank pay for his miscalculation and gouge him with a fee that EXCEEDS any pay day loan cost either in Dollars or APR.

In 2006, consumers will also spend $4.2 billion in ATM service charges to withdraw their own money. They will pay an estimated $22 billion in NSF fees to banks and credit unions and banks will collect an estimated $10.3 billion for overdraft protection services.
Businesses will charge an estimated $57 billion in late bill payment fees (more than 140 percent of the total estimated payday lending volume in the U.S.). And credit card interest will cost consumers more than $87 billion.

If my son deposited the shortfall the day after the bank approved and paid his overdraft that would only be 638,750.0%

When will the journalists, City councils, Legislators, Center for Responsible Lending and Consumer Federation of America figure out that Banks are hurting Americans more than they are willing to recognize, BECAUSE they never pay these fees, BUT constantly attack a product they never have needed or choose to use themselves.

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Re: Banning Payday Loans is No Bargain