BIG BANKS NOW IN THE PAYDAY LOAN BUSINESS
This article by Michael Snyder is very disturbing.
Payday loans are not a good option on meeting your bills and debt obligations. All you are just doing is increasing your debt load and exchanging one lender for another and at higher interest.
Ask yourself: Is this being a wise steward of what blessings you have been given? Would you be better off to contact the business or governmental entity and trying to work out a delayed payment plan? Many entities will do this. Why? Because in a challenged economy they know two things: (1) If they cut your services off, then it is unlikely you will pay restoration fees and remain their customer; and (2) If they send your debt to a credit reporting agency, they are unlikely to get payment. I know if I have a disputed debt, someone turns me in to a credit reporting agency, then it will be a cold day in Hades before they get one cent. If they want payment over a disputed issue, then they will negotiate with me. I will not support credit reporting abuse.
Should you learn to be a cash paying person and avoid debt so your credit report is not used as a hammer on your head? Going cash or using debit cards at first is hard but in the end it is very liberating. I recall Dave Ramsey, who gives advice on personal finance and planning, saying that he has no credit cards, only will use debit cards, will not take out loans, etc. He said that despite him having multi-million assets (meaning 8 figures) he has credit score of zero.
I know that many of you if you own a home need to have a mortgage. But should you really have any credit beyond this? (And in the interim, work on paying off that mortgage.) If you don’t have the money for anything that you want to purchase, then is that a sign just to wait a few weeks until you get the funds to pay cash?
I understand the concept of having credit cards and paying the bill off when it comes due. But this is risky business because at times some “emergency” comes up that robs us from paying that credit card in full.
If you are going to pay the bill off anyway within 20 days, then why not just have that money in your checking account and using your debit card? That way you eliminate the risk of the “emergency” robbing you of a paying the monthly bill off in full.
Another reason to eliminate the credit cards and use debit cards is that credit cards are another way of funding the “Too Big to Fail Banks”. Do you want to fund their arguably socially irresponsible conduct with the derivatives, liar loans and credit default swaps transactions?
WHO ARE PAYDAY LOAN CUSTOMERS?
You’d be surprised to know who payday loan customers are: your neighbors. Yes, from what I’ve learned it is the middle class: teachers, law-enforcement personnel, and even highly educated professionals, i.e., lawyers.
In the early 2000’s I crossed paths with an owner whose family owned 50+ payday loan stores. I was surprised what he told me about who their customers were. Many of the loans, became multiple loans and higher interest, before and if the loans got paid off.
I could not understand why individuals would allow this to happen to them. He said their primary reason they do this is to save their credit score. If it was me, and I was in a bad bind and could not work out extensions, then I would let that credit score decrease before I would waste monies when my budget is economically challenged. If I am having that much difficulty then I do not need to be pouring gasoline on the fire.
NOW TOO BIG TO FAIL BANKS ARE GETTING IN THE ACT
As you can see I have ethical concerns about Payday loans.
It’s evident that the economy is getting more challenged when the “To Big To Fail” banks are getting in the Payday Loan business. Do you think that with all they did to contribute to the 2008 housing crisis with their liar loans, necessitating the 2008 Wall Street Bailout, that their venture into this area reflects their piranha, man eating mentality? They can argue that it is legal, high profits. But think about the morality and ethics of this. Are they are a major contributor to our economic problems? Should they get more profits for conduct in which they arguably have some social, economic, political and ethical responsibility?
You don’t have to be a Christian to appreciate the wisdom and saying of King Solomon (in history he was the richest man to have lived on earth) contained in the Book of Proverbs (Chapter 22, Verse 7):
The Rich rules over the poor,
And the Borrower becomes the lender’s slave.
Think about it!–No name attorney
Shut Them Down! – Payday Loan Companies Are Making Billions Preying On The Misery Of The Poor
By Michael, on May 12th, 2013
Would you take out a loan that has an annual percentage rate of 391 percent? Yes, I know that sounds absolutely crazy, but millions of Americans do it every single year. The typical payday loan requires borrowers to pay about 15 dollars for every $100 that they borrow for two weeks. That comes out to a yearly rate of about 391 percent. And the payday loan companies know exactly who to target. They have set up thousands of shops in the poorest communities all over the nation over the last several decades. Each year, approximately 12 million Americans take out payday loans and they pay approximately 7.4 billion dollars in interest and fees on those loans. Sadly, once you get hooked on payday loans they are very hard to stop. In fact, one study found that only 13 percent of payday borrowers get two loans or less per year. All other borrowers take out more loans than that. In fact, more than a third of all payday borrowers take out between 11 and 19 loans during the course of a single year. And as was mentioned earlier, the interest rates on these loans are beyond exorbitant. Payday loans are estimated to be about 20 times more expensive than bank loans, with annual interest rates that are sometimes as high as 500 percent. The payday loan companies circle the poor like vultures, because they know that the poor are the only ones desperate enough to agree to such terms. This is why we need to shut them down. The payday loan companies are making billions preying on the misery of the poor and it needs to be stopped.
And it just isn’t small, disreputable banks that are involved in these practices. The truth is that some of the largest banks in America are now making payday loans…
Some, including U.S. Bank, Fifth Third Bank and Wells Fargo, offer payday loans under names such as Ready Advance, Fast Loan and Early Access, according to the Center for Responsible Lending (CRL). They can carry interest rates averaging between 225 and 300 percent, CRL said.
Others major banks not making such loans directly, but instead they are investing millions of dollars in the companies that do make the loans. Bank of New York Mellon Corp., JPMorgan Chase and Bank of America are just some of the major banks that have invested large amounts of money in the payday loan industry.