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Wed Apr 20, 2016, 01:40 PM

Payday 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


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?)


11 replies, 1989 views

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Arrow 11 replies Author Time Post
Reply Payday Loans Are Shutting Down Some Americans' Bank Accounts (Original post)
progree Apr 2016 OP
KamaAina Apr 2016 #1
Scootaloo Apr 2016 #4
liberal N proud Apr 2016 #7
KamaAina Apr 2016 #8
liberal N proud Apr 2016 #9
hollysmom Apr 2016 #2
Else You Are Mad Apr 2016 #3
underpants Apr 2016 #10
TubbersUK Apr 2016 #5
Turbineguy Apr 2016 #6
Initech Apr 2016 #11

Response to progree (Original post)

Wed Apr 20, 2016, 01:42 PM

1. And DWS rubs her hands together with glee!

 

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Response to KamaAina (Reply #1)

Wed Apr 20, 2016, 01:45 PM

4. We have to make the tend big enough to envelop the GOP's three ring circus!

 

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Response to KamaAina (Reply #1)

Wed Apr 20, 2016, 02:15 PM

7. Dancing With the Stars?

What does that have to do with Pay Day Loans?

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Response to liberal N proud (Reply #7)

Wed Apr 20, 2016, 02:17 PM

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.

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Response to KamaAina (Reply #8)

Wed Apr 20, 2016, 02:17 PM

9. Oh you are throwing her under the bus again

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Response to progree (Original post)

Wed Apr 20, 2016, 01:42 PM

2. Go D W-S keep supporting these shit companies!

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Response to progree (Original post)

Wed Apr 20, 2016, 01:43 PM

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.

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Response to Else You Are Mad (Reply #3)

Wed Apr 20, 2016, 02:30 PM

10. Yes. They are scum.

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Response to progree (Original post)

Wed Apr 20, 2016, 01:50 PM

5. K & R

Oh, how I despise these vultures.

I've seen the impact of this practice on low income families - heartbreaking.

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Response to progree (Original post)

Wed Apr 20, 2016, 01:57 PM

6. Yes, because the more

people we cut out of society, the better it will function.

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Response to progree (Original post)

Wed Apr 20, 2016, 03:05 PM

11. These people are vultures and leeches.

John Oliver did an excellent job of taking these pieces of shit down:



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