Friday, February 26, 2010

Bank direct deposit advance versus payday loans

Are banks planning to use the payday loan industry's tactics?

Banks are considering the use of payday advances to supplement the cost of lost overdraft fees totaling $15 billion, due to new rules that regulate how many over draft fees they are allowed to give a person each day. "Effect July 1, the rules will prohibit banks from charging overdraft fees at automated teller machines or on debit cards unless a customer has agreed to pay for exceeding account balances," states Rowe and Plungis. This new development is to say the least scandalous because just a little while ago, these same banks were trying to alienate the payday loan industry for tactics far less damaging. Do you think this is a coincidence? I think not!

Banks want to resell overdraft protection in disguise.

"The smarter banks are trying to resell overdraft protection to consumers as a different product," said Elizabeth Rowe, group director of banking advisory services at Mercator Advisory Group in Maynard, Massachusetts and of the banks already providing this service, but the catch is that they charge an annual rate of 120 percent. Installment loans and other short term loans online come with interest rates that are a little higher. ... click here to read the rest of the article titled "Bank direct deposit advance versus payday loans"

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