Fifth Third Bank and U.S. - respectively the fourth and eighth by the bank deposits of Nashville - have programs that offer 35 days payday loans for customers with direct deposit checks. The loans come with an annual rate of 120 percent or a 10 per cent of loans.
It is a much higher rate than any other form of credit almost all other companies that offer pawn loans, or unsecured as wages, which often charge rates up to 400 percent in April.
It is rare for TAP credit cards that much higher than 30 percent. However, progress paycheck, banks and payday lenders no credit check. Tennessee law requires any person receiving an emergency loan to have a checking account and a job with a salary.
"The big difference is that this product is a feature that adds to your existing checking account," said Mark Erhardt, senior vice president of retail products at Fifth Third.
Although the bank is certainly a profit in starting the program, but also offers a service that competitors do not, said Erhardt.
The Cincinnati, Ohio, Fifth Third began developing the program in late 2007. The bank introduced the product in most markets, including Tennessee, last fall entitled "Access Control soon," said Erhardt.
Erhardt declined to say how many customers have used or registered for the service, or the amount of money that the bank has made in the program. He said that so far, few customers have repeated use.
Unlike other payday lenders traditional banks require a deposit check directly with the client and take the cost of borrowing for the control before it is deposited into the customer's account. This means that very little chance of late fees on the loan, but it also means that the bank has paid the bills or before any other expenses.
Although the rate may be lower than payday lenders, banks advance check has all the characteristics of predatory lending, including three-digit APR programs that target those with financial problems, said Uriah King, an analyst at the Centre for Legislation Fisheries Responsible Lending, a consumer advocacy group based in North Carolina.
This is not surprising, he says, a time when many banks are in financial trouble themselves.
"It's one more way that banks can extract the fee income people who can afford it," he said. "... Although it is supposed to solve the problems of people in these situations, they really only increased in a hole."
He says that banks have increased the proportion of their income from fees such as overdraft fees. A report in November by the Federal Deposit Insurance Corp. showed that in 2006, banks collected 1970 million in fees for insufficient funds and overdrafts - 74 percent of all fees charged by banks.
The payday advance is a relatively new industry with the development of regional and national companies in the 1990s. Community Financial Services Association of America, a trade group of payday loans, estimates that there are 2200 stores in short-term loans in the country, making $ 40 billion in short-term loans every year.
Jabo Covert Vice President of Cleveland, Tennessee-based Check in cash, the largest and one of the oldest companies ahead of earnings in the country, said he welcomes the competition between banks.
"I always laugh and ask them what took them so long," he said.
The FDIC has launched a pilot program in 2008 with 31 banks that offer "dollar loans small." The program follows the guidelines, which cover 36 per cent in April.
Fifth Third, however, do not use these guidelines because their program was already underway, said Erhardt. U.S. Wells Fargo Bank and also had programs in place before the publication of these guidelines.
U.S. Senator Dick Durbin, Illinois Democrat, introduced a bill to Congress in February, which would establish a ceiling of 36 per cent of personal credit in April - a move that was rejected by payday lenders. Similar legislation was considered by some lawmakers of Tennessee.
One thing I Erhardt, clandestine and King agree that it is more likely that banks enter the market for payday loans in the coming years. The FDIC said last year that he was aware of the 41 banks in the country to develop programs payday advance. Refund rel = "nofollow">
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