More from today’s WSJ…
April 13, 2009 | alternatives, industry | Comments (0)Today’s front page story about bank fees mentions payday loan alternatives being offered by U.S. Bank and Wells Fargo (and Fifth Thirds). It fails to mention that these payday advances are paid automatically from the customer checking account when the next direct deposit hits the account, making the loan term anywhere from 1 to 35 days. The APR varies greatly based on the loan term, ranging anywhere from 104% to 3,650% to APR. To actually receive a 120% APR loan (as mentioned in the article), the loan term would fall between 30 and 31 days.
Regional banks U.S. Bancorp and Wells Fargo & Co. offer “checking account advance” loans that allow customers with direct-deposit accounts to access funds before they are credited to a customer’s account balance. The short-term loans carry annual interest rates of about 120%.
U.S. Bancorp and Wells Fargo said the loans satisfy customer needs for emergency credit. The cost to borrowers is relatively low, according to the banks, because the loans usually are repaid within weeks.
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