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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsPayday Loans Are Shutting Down Some Americans' Bank Accounts
Online payday lenders are creating new hazards for borrowers, leading to large overdraft fees and even loss of access to checking accounts, federal regulators claimed Wednesday.
Online payday lenders often have direct access to borrowers' checking accounts for deposits and payments. When borrowers don't have sufficient funds in their accounts to pay the lenders, repeated withdrawal attempts made by lenders result in multiple non-sufficient funds charges averaging $185, the Consumer Financial Protection Bureau said.
(snip) "We found that over the study period, 36% of accounts with a failed debit attempt from an online lender ended up being closed by the bank or credit union," Cordray said. "Getting booted from the banking system can have far-reaching repercussions for consumers, leading to a downward spiral that costs them even more money and their precious time. It can be hard to get a new account at another bank. It can mean having to use expensive check-cashing and bill-paying services to cash their paychecks or their benefits checks or to pay their bills, services they used to take for granted."
Repeated debit attempts by online lenders usually fail 70% of second attempts don't result in any collection, and further attempts fail even more but there is some logic to why they try. In some cases, borrowers may not have the entire amount owned available in a checking account but might have part of it. A lender may first try to collect $300 and fail, but then might split that request up into three $100 debits and succeed in getting some of the money it's owed. The cost to lenders for additional requests is negligible, but each failed debit costs consumers $34, on average. The lender may apply additional fees as well.
More: http://finance.yahoo.com/news/payday-loans-shutting-down-americans-110000192.html
Online payday lenders often have direct access to borrowers' checking accounts for deposits and payments. When borrowers don't have sufficient funds in their accounts to pay the lenders, repeated withdrawal attempts made by lenders result in multiple non-sufficient funds charges averaging $185, the Consumer Financial Protection Bureau said.
(snip) "We found that over the study period, 36% of accounts with a failed debit attempt from an online lender ended up being closed by the bank or credit union," Cordray said. "Getting booted from the banking system can have far-reaching repercussions for consumers, leading to a downward spiral that costs them even more money and their precious time. It can be hard to get a new account at another bank. It can mean having to use expensive check-cashing and bill-paying services to cash their paychecks or their benefits checks or to pay their bills, services they used to take for granted."
Repeated debit attempts by online lenders usually fail 70% of second attempts don't result in any collection, and further attempts fail even more but there is some logic to why they try. In some cases, borrowers may not have the entire amount owned available in a checking account but might have part of it. A lender may first try to collect $300 and fail, but then might split that request up into three $100 debits and succeed in getting some of the money it's owed. The cost to lenders for additional requests is negligible, but each failed debit costs consumers $34, on average. The lender may apply additional fees as well.
More: http://finance.yahoo.com/news/payday-loans-shutting-down-americans-110000192.html
Anyway the Consumer Financial Protection Bureau (CFBP) is about to issue rules to restrict the practice. Let's hope so. For now, just a heads-up on dealing with shady lenders (yeah, I know, which ones aren't?)
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Payday Loans Are Shutting Down Some Americans' Bank Accounts (Original Post)
progree
Apr 2016
OP
KamaAina
(78,249 posts)1. And DWS rubs her hands together with glee!
Scootaloo
(25,699 posts)4. We have to make the tend big enough to envelop the GOP's three ring circus!
liberal N proud
(60,334 posts)7. Dancing With the Stars?
What does that have to do with Pay Day Loans?
KamaAina
(78,249 posts)8. Deborah Wasserman-Schultz (DINO-FL)
DNC chair and Hillary cheerleader. She just backed legislation aimed at protecting these sharks.
Oh, and Dancing With the Stars is abbreviated DWTS.
liberal N proud
(60,334 posts)9. Oh you are throwing her under the bus again
hollysmom
(5,946 posts)2. Go D W-S keep supporting these shit companies!
Else You Are Mad
(3,040 posts)3. Those lenders are disgusting.
This is just another example of the fact that it is very expensive to be poor. Usury used to be illegal for centuries for a good reason.
underpants
(182,736 posts)10. Yes. They are scum.
TubbersUK
(1,439 posts)5. K & R
Oh, how I despise these vultures.
I've seen the impact of this practice on low income families - heartbreaking.
Turbineguy
(37,313 posts)6. Yes, because the more
people we cut out of society, the better it will function.
Initech
(100,060 posts)11. These people are vultures and leeches.
John Oliver did an excellent job of taking these pieces of shit down: