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6 large banks rapped in payday loan report
March 25, 2013 – A report last week by the Center for Responsible Lending took six large banks to task for payday lending practices that "continue to trap borrowers in high-cost, triple-digit debt."
 The Center for Responsible Lending released its latest payday lending report last week. The report looks at practices of six large banks. |
The report focuses on six banks included in the group's 2011 report on payday lending. The CRL has urged regulators to ban payday loans. For its part, NCUA has set a rule that permits "payday alternative" loans that are small in amount and duration and with interest rates indexed to the current federal credit union usury rate ceiling.
In last week's report the CRL said:
- Bank payday loans have an annual percentage rate averaging 225-300 percent.
- The median bank payday borrower took out 13.5 loans in 2011 and spent at least part of six months during the year in related debt. More than one-third of borrowers took out more than 20 loans; the mean was 19 loans per borrower.
- Bank payday borrowers are two times more likely to incur overdraft fees than bank customers overall.
- More than one-fourth of bank payday borrowers are Social Security recipients.
The banks named in last week's report are the same banks noted in the CRL's 2012 report: Wells Fargo, U.S. Bank, Regions Bank, Fifth Third Bank, Bank of Oklahoma and Guaranty Bank. The Washington Post also reported on the findings.
NCUA data show a total of 562 loans outstanding at credit unions as of last Dec. 31 under the agency's small-dollar, low-rate loan rule.
- "Triple-Digit Danger: Bank Payday Lending Persists," 3/21, Center for Responsible Lending