High-cost installment loans: No improvement over payday advances
Until 2013, a small number of banks were siphoning huge amount of money yearly from client records through вЂњdirect deposit advanceвЂќ вЂ” items that carried typical annualized rates of interest all the way to 300%. Like storefront payday advances, deposit advance ended up being marketed as a periodic bridge to a consumerвЂ™s payday that is next. But additionally like storefront payday advances, these bank services and products caught borrowers in long-term, debilitating financial obligation.
But banking institutions destroyed desire for deposit advance because of 2013 regulatory guidance instructing financial institutions to evaluate borrowersвЂ™ ability to settle their loans centered on income and costs. Now, amid a tempest of deregulation in Washington, the banking industry is pressing regulators to allow them back to the payday lending game. They should be aware of better.
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