APR doesn’t provide a “clear picture of the product”
June 25, 2008 | alternatives, positive media coverage | Comments (1)An article in the Politico, ”Consumers fight for choice in overdraft protection” discusses efforts to require banks and credit unions to disclose their fees in terms of APR.
Financial institutions and their trade associations plan to write their own comment letters on the Fed rules. Banks and credit unions alike object to bringing overdraft loans under Truth in Lending rules, arguing that expressing the charges in terms of an APR would not help consumers.
“We’re all for disclosure,” said Mary Dunn, the Credit Union National Association’s senior vice president and associate general counsel of regulatory advocacy.
But disclosing the APR wouldn’t give consumers a clear picture of the product, she said, given its short-term nature and particular structure.
“It’s going to look like the percentage rate is really exorbitant when it isn’t,” based on the cost to the consumer, she said.
Sound familier? Like the Payday Pundit always says, disclosing short term credit products with annual rates is like Hertz or Avis quoting you an annual car rental fee when you only want it for a weekend.
Comments»
Duh – Isn’t that what Payday lenders have been saying all along. APR doesn’t provide a “clear picture of the product. Now the banks know what the payday loan companies are up against and why can the banks avoid quoting APR when overdraft protection is very similar to a payday loan.