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‘Payday’ loan rates still high
TweetPublished: Tue, September 29, 2009 @ 11:50 a.m.
COLUMBUS — Payday lenders continue to charge triple-digit interest on short-term loans, despite actions by lawmakers last year to stop the practice.
That’s according to a study released Tuesday by Policy Matters Ohio, a Cleveland-based nonprofit that studies economic policy issues.
The group visited or called 69 payday lending stores in the state, seeking information about the interest rates and fees charged on their short-term loan products. Every location contacted is charging triple-digit interest — some topping 600 percent.
For more on this story, see Wednesday’s Vindicator.
Comments
At least payday lenders will tell you what they charge beforehand. Banks wait until you overspend your account to hit you with overdraft charges, which are more expensive than payday loans.
The FDIC reports that, assuming a $27 overdraft fee a customer repaying a $20 POS/debit overdraft in two weeks would incur an APR of 3,520 percent; a customer repaying a $60 ATM overdraft in two weeks would incur an APR of 1,173 percent; and a customer repaying a $66 check overdraft in two weeks would incur an APR of 1,067 percent.
Next time you gripe about tripe-digit payday loans, take a look at the four-digit bank products.
It should be noted that the triple digit interest charged is an APR whereas these loans are to be repaid in a few weeks. So, that is somewhat misleading.
In any event, buyer beware. They do not call it loan sharking for nothing.
Ryan, there's a simple solution... check your balance beforehand. It's not hard; if a 21 year old can go 3 years without overdrafting so can you. It's not even interest either, interest is the premium for renting money, you are speaking of fees for being an irresponsible citizen.
They need to get rid of these places by educating the people taking the loans, not the people handing out the loans.
I believe this issue was addressed in the bible (or koran if you're muslim) under usury.
Mr. Answers:
What if you need a $100 in groceries to feed your family and you don't have the money? The payday loan is cheaper. Sometimes people fall on hard times and need short-term credit. That's my point.
If you want to open a zero-interest loan business under Biblical or other religious standards, a bid you good luck.
So is your problem with people not being able to afford groceries or banks charging for overdrafting? I personally think banks should be obligated to set up a reject system on your debit card if there is not enough funds in your account or the account backing it.