Payday Loans Blog

Recently a Payday Loans store in Illinois was fined over $1 million due to the careless nature in which they handled their customers' personal and sensitive information. How careless? How would you like to have papers lying around for anyone to find that not only had personal financial information on it, but your social security number along with a photo copy of your drivers license to go along with it? Well that is exactly what was found; and not from just one customer, but many customers, and not from just one store location but multiple! These Payday Loan stores were simply putting boxes full of customers' sensitive information out in trash bins behind their stores. Imagine the frustration of trying to go through all the loops to keep your personal information safe after all the latest talk about identity theft, and then this happening to you.

Be sure that you are looking into the security measures of the Payday Loan company that you choose.

Not all Payday Loan businesses are created equal
For over 23 years, Check City has been building trust with hundreds of thousands of satisfied and happy customers by not only helping them to get the money they need when they need it most, but by making the process fast, easy, affordable and secure; or in other words, worry free.

Check City is a member of:

• The Community Financial Services Association (CFSA) and abides by the CFSA's best practices
• The Financial Service Centers of America (FISCA)
• The Utah Consumer Lending Association (UCLA)

Check City is committed to protecting the privacy of their customer's information:

• We maintain physical, electronic, and procedural safeguards to transmit, store and discard of any information we receive about you.
• We use and maintain computer virus protection software, firewalls, and use a Secure Socket Layer (SSL) for data transmission to secure your information.
• We are regularly reviewing new advances in security technology and techniques to provide protection of your personal information.
• We permit only authorized employees who have a job specific purpose and are trained in the proper handling of customer information.

Check City is a company you can trust. Visit them today to see for yourself why they are one of the leading lenders in their industry. 

Jamie Fulmer recently wrote an article supporting the payday loan option.  In the column, he highlighted the negative conotation that a local newspaper, The State, a South Carolina based paper, has been giving to the payday loan industty. 

The State has clearly made its position known.  The paper has written several articles and columns calling for a ban on payday advances and have questioned the payday lending industry's lobbying and political contributions, suggesting that they are trying to persuade policy.

Fulmer points out that this position blatantly dismisses the value of the payday loan services for families.  There are thousands of consumers of payday loans in the state of South Carolina.  He also stated the the vast majority of consumers appreciate the service, have a good experience with it, and use the services responsibly.  He went on to explain that for one South Carolina company, Advance America, 90 percent of their customers repay their loans on time and are completely satisfied with the product.

We all know that our currently economy is struggling.  In a time of such financial and economic troubles, it's necessary to have services available for hardworking people who need access to short-term loans.  Sometimes payday loans are their only option or the least expensive option.  Payday loans are a great way to go for a lot of people, especially those who want to stay away from increased bank fees and credit card debt.  

It is important for people to have the freedom to weigh their options and choose the financial option that will be best for their situation.  Payday loans are one option that have helped many people, and should remain an option.  

One of the major criticisms of payday loans are that their rates are too high.  Well, now Congress is looking at banks and their overdraft fees with the same eye.  

Banks call the the "service" overdraft protection.  So, lets say, for example, that you go to the gas station and get a candy bar.  BUT, you only have a dollar left in your checking account and the candy bar costs two dollars.  Never fear!  The bank will protect your overdraft by charging you a large fee-basically, an automatic loan.

There are now a number of lawmakers and consumer groups that are urging Congressional leaders to include overdraft reform in a package concerning the regulation of the finance industry.  One of the main arguments against this kind of overdraft "service" is that American taxpayers have bailed out Wall Street banks already, and are now having to endure dealing with abusive fees from those they rescued.

Last November a report was released by the Federal Deposit Insurance Corporation that found that overdraft fees ranged from $10 to $38 on average.  In 2007, the Centers for Responsible Lending, who generally speak out quite frequently about payday loans-by the way, reported that overdraft fees bring in about $17.5 billion each year.

Another major issue is that most banks automatically enroll their customers in the overdraft protection program without their knowledge or consent.  There also is no system in place that will warn customers that a potential purchase will send them into overdraft territory.

These are large concerns and are, luckily, finally being recognized and addressed.  Instead of going after short-term payday loans as the only financial entity that should be regulated, there is finally attention going to those who are hurting consumers unknowingly and aggressively.  

There was recently an article written in The Sun News, a South Carolina paper, concerning the option of a payday loan.  The article was written by Craig Conwell and has some very valid and interesting points that I wanted to briefly summarize.  

 Craig is a 42-year-old man who successfully graduated from college and had numerous small businesses.  He has been professionally successful, but has also had some very hard times.  He says, "...there have been times when I did not know if I would make it.  And I would not have made it without the sole institution that was willing to work with me on small loans over a short period of time, and that is the payday lending industry."

Craig is like almost everyone in our great nation.  He has ups and downs.  He pointed out that while he was having financial struggles, banks and other lending companies weren't interested in helping him with immediate financial needs.  They of course would give a loan for a car or house that would take years  (and plenty of interest) to pay back, but small short-term loans for immediate needs were not something they were interested in.

There are some in South Carolina who think that they should adopt the same legislation that Georgia and North Carolina passed.  However, the only thing that happened in those states was that payday lending was banned entirely.  A study later showed that consumers in those states had more bankruptcies and credit problems because of it.  

The major issue is-what will take the place of payday loans if they are done away with?  In the previously mentioned states, there was no help for those who needed short term loans.  It can be very hard to find an affordable alternative.  

Payday loans are a viable and reliable option.  In these hard economic times, it seems ridiculous to take away financial options.  People need more options, not less.   

The House Financial Serivces subcommitee is preparing to legalize payday loans with a 391% interest rate.  This subcommittee is in charge of consumer credit issues with Luiz Gutierrez as the chairman.  

Gutierrez now has a "power" plan that is suppose to help the payday loan industry.  However, many of it's provisions would be detrimental for payday loan companies.  Critics of the payday loan industry say that the industry is "pretending" to oppose his bill.  I do believe that, in this case, the opposition is sincere and warranted.

The bill contains regulations that are extremely stringent.  The basic aspects of the measure include capping the annual interest rate for payday loans at 391 percent, ban "rollovers"-which allows the borrower who can't afford to pay off the loan to renew the extend the loan with a fee.  The proposal would also prevent payday lenders from suing borrowers who don't pay back their debts, or garnishing wages from the borrower to collect the debt.

That last point of not being able to take the appropriate measures to collect the money that is owed is, by itself, very reasonable grounds to oppose the measure.  If that were to pass, it would essentially be impossible for payday lenders to collect any of the money they lend.  

The current proposals for regulating payday loan companies are very flawed, with regulations that would cause the complete elimination of payday loan companies.  In order to regulate this industry appropriately, there needs to be a bit of compromise from those who are "protecting" consumers.  Payday loans are a valid and essential resource for those needing short-term loans.  Hopefully there will be an appropriate and fair resolution.

A columnist for a San Angelo, Texas publication describes payday loans as filling a "financial void".  The columnist, Dennis Weese pointed out several reasons why payday loans are such a necessity.  But the overall feel of the article was how payday loans can serve as the best option for a lot of families with financial struggles.

In every state there are individuals who are hard-working citizens, but live paycheck to paycheck.  Especially with the current economic situation, many families and individuals have learned how to stretch their dollar.  However, sometimes they need a little extra to pay for a pressing need, like car trouble.  

The article also points out that a lot of families don't make maxing out a credit card an option (which is very wise), and if a check bounces, the bank fees are, more often than not, greater than a short-term payday loan would be.  

Because of different financial situations, it's essential to have a variety of responsible lending options.  Payday loans have "filled the void" that most banks left when eliminating short-term, small-dollar loans.  There is still a large demand for those types of loans, and most consumers who enter into these loans do so responsibly and are greatly benefited by them.

There are those who do not weigh their options appropriately and may have financial issues with payday loans.  Often, these people would have financial struggles with any financial option they were to choose.  Payday lenders work hard to make sure their customers understand how exactly a payday loan works and what they will ultimately be paying for the loan. 

Payday loans are a viable solution to those who need them, and while regulations are necessary for any industry, payday loan companies should not be solely targeted for providing a service that is so helpful for many citizens. 

Recently, USA Today printed an article about how banks, not payday loan companies, are causing financial woes for their consumers. Banks continue to be considered the “stable financial standard”, while payday loans are the “evil” alternative. However, how much goes overlooked when it comes to bank fees and overdrafts?

The article cited two specific consumer experiences.  First, a 43 year old divorced mother of two was slapped with a $175 overdraft fees for small-dollar debit card purchases.  Small, as in coffee and lunch.  Similarly, a 33 year old had overdraft fees adding up to $400 within a few months.  She apparently kept very good tabs through her online account, but was still surprised with overdraft fees.  She stated that the fees "affected her (abilitiy to pay) groceries, gas money, everything you need to live on."

In a survey conducted by USA Today, it was found that, of the largest retail banks, none of them provide warnings for point of sale overdrafts to their consumers.  So, essentially, in the most crucial time for a consumer to know what fees will be incurred, there is no information given.  Individuals are unknowingly hit with relatively large fees.  

One of the beautiful things about payday loans is that the consumer knows beforehand exactly what fees will be added.  A lot of payday loan critics state that the short-term loans "target" unexpecting and incapable borrowers.  It seems that, at the very least, the payday loan industry provides the information necessary for it's borrowers to make informed decisions and knowledge concerning what exactly they will be paying.       

Missouri is the most recent state to bring a bill to the House looking to tighten payday loan restrictions.  The state currently caps payday loans at $500 and an individual must take out a loan for a 14-30 day period, and can renew the loan up to six times.  The new bill, filed by Rep. Mary Still, would cap the APR at 36 percent.  It would also allow a one time fee of $15 per $100 loan, but ban any renewals. 

Those in favor of the bill use the typical excuse, saying the bill will protect people from "predatory lending".  Larry Weber, Missouri Catholic Conference Executive Director, said, "People are taking out loans who, there's just not any reasonable likelihood that they're going to be able to pay this in a reasonable amount of time."  It doesn't sound like those people are being preyed upon, it sounds like they are taking out loans they can't pay back.  

Responsible lending is up to the lender.  Responsible borrowing is up to the borrower.  A payday loan is a short-term loan for those who can't get a loan from a more traditional financial lender.  Payday loan companies have higher rates because they take on a greater risk.  

Capping these short-term rates would initially cripple payday loan companies, and ultimately push them out of business.  Luckily, the Missouri House has faced similar bills in the past that have gotten nowhere.  Hopefully, the House will recognize the need for payday loan companies and how they provide a needed service to a lot of people.  

A bill that capped the annual percentage rate on short-term payday loans at 28 percent was signed by Ohio Governor Ted Strickland earlier this past year.  However, Rep. Bob Hagan stated recently that he is "embarrassed that the storefronts continue to operate throughout Ohio."

Hagan sponsored a bill last year that would have put a 36 percent cap on payday loan rates.  As stated above, a different bill was passed that makes the cap even lower.  Apparently, Ohio payday loan companies have now obtained licenses under two other code setions-the Small Loan Act and the Mortgage Loan Act.  Hagan said, "They (the payday loan companies) seem to have won on legal terms."  It seems interesting that he is trying to condemn the industry for legally keeping higher rates.

He later went on to say, "It's embarrassing, it's wrong and the people of the state of Ohio have said as loud as they could that they didn't want this type of payday lending industry to operate in the state of Ohio."  That statement seems a bit contradictory on several levels. 

First of all, if the citizens have "said as loud as they could" that they don't want payday loan companies, then how are the companies staying in business?  Could it be that the Ohio citizens are still using that resource?  A lot of individuals responsibly use the payday loan service with no negative experiences or problems. 

The second thing Hagan indicated in this statement is that he doesn't seem to want to just cap the rates, he wants the whole industry to leave the state.  Apparently he realizes that a 28 percent rate cap would ultimately put the industry out of business. 

Putting payday loan companies out of business would not solve borrower's problems of needing a loan.  They would have to get a loan from a different source, and some may not be able to reach the higher qualifications of a bank loan.  Payday loans help consumers who need a quick and convenient loan.  Taking that service away would only cause more hardships for Ohio citizens that need a short-term loan option.

One of the major issues that opponents to the payday loan industry has is the rate percentage.  Short-term loans do require a higher rate of interest.  However, the effect on consumers due to the rates is often taken out of context and exaggerated.  Payday loan advocates have often pointed out that the fees attached to "traditional" borrowing, such as credit cards, are often higher than payday loans.

USA Today recently reported an increase in bank credit card fees.  It reported that, "A growing number of banks are raising credit card fees or rolling out new fees..."  Some of the specific banks cited were Wells Fargo, which increased late fees and cash-advances fees; Chase, putting a yearly $120 fee on cards with low interest rates; and American Express, which raised its late fee for some business cards.

Robert Hammer, chairman of R.K. Hammer, stated that banks "are not going to watch their costs go up and take no action."  So, in essence, banks are deciding to increase rates and fees to protect itself against the failing economy.  I wonder if the "consumer advocates" will be fighting against this action as hard as they fight against short-term payday loans.

Managing director of Fitch Ratings, Kevin Duignan, recently stated that, "The unemployment outlook is dreary, there's been a tremendous loss of personal wealth, and the housing situation has forced many consumers to take a hit."  So, in response to the "huge hit" that consumers have been taking, banks will raise rates and fees.

It's interesting to note that many payday loan consumers recognize that the fees they are charged by banks are already much greater than those needed to take out a payday loan.  That is exactly why payday loans are such a great benefit to those who need short-term loans in a hurry.  They know exactly what the fee will be and don't have to worry about any hidden fees or charges.