BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.
The payday loan industry can’t seem to stay out of the headlines this year. Today, American Banker reports (Fifth Third, Capital One Cut Off Payday Lenders) that Capital One and Fifth Third are cutting off access to financing for payday lenders.
This comes on the heels of a Washington Post article about Wells Fargo possibly cutting off financing to a Minnesota payday lender (Banks to payday lenders: Quit the business or we’ll close your account).
As payday loan enablers cut off the financing that allows these lenders to stay in business, it becomes more difficult for them to continue offering abuse loans. Bank of America has already announced plans to “not renew” relationships with current payday lenders, while Chase floated a trial balloon about cutting off lending to payday and other lenders last fall.
However, it’s important to note that some other high-cost, abusive lenders are still getting access to financing from big banks.
For example, as Adam Rust points out on BankTalk, (World Acceptance Doubles Down, As if to Shrug off the CFPB’s CID) banks are still financing other high-cost lenders, like World Acceptance. Banks including Wells Fargo, Bank of America, and Capital One are still providing financing to this lender.
If you haven’t read it yet, the CFPB’s latest report on payday lending paints a very ugly picture of the industry and how it treats its customers. The CFPB’s analysis found:
- Over 80% of payday loans are rolled over by taking out another loan within 14 days. This finding contradicts industry claims about the loans being an important service for people who have one-time emergencies.
- Half of all loan sequences are at least 10 loans long.
- For more than 80% of payday loan borrowers, the last loan size is the same size or larger than the first loan in the sequence.
- For borrowers who are paid monthly and who use payday loans, 58% receive monthly government benefits such as Supplemental Security Income (SSI), Social Security Disability, or retirement benefits. These borrowers are also disproportionately likely to stay in debt for 11 months or longer.
To read the report, visit: CFPB Data Point: Payday lending