Friday/May 9/2008

CONSUMER ADVOCATE: RESTRICTING PAYDAY LOANS A "BIG MISTAKE"

Recent attempts by politicians to limit payday lending are misguided, according to an official of a leading consumer advocacy group.

Tim Miller, communications director at the Center for Consumer Freedom, cited as proof a Federal Reserve study that found both bounced-check fees and bankruptcy filings rose dramatically in Georgia after payday lending was banned.

Critics of payday lending frequently point to interest rates, which, when annualized, can appear to be high. In response Miller asks: "what's worse, bouncing checks and wrecking your credit rating, or paying a lender $15 for a $100 advance on your paycheck?"

Related Story

-***-

Wednesday/April 30/2008

USE PAYDAY LOANS FOR ALL THE RIGHT REASONS

The upcoming Cinco de Mayo holiday is a good time to think about cash advances -- and not for financing your bar tab, either. Rather, it's time to reflect on what payday loans should be used for, and when they should be taken out.

For example, the Community Financial Services Association of America (CFSA) has mandated that its member associations not encourage payday lending for any kind of leisure activities, including drinking or gambling. Rather, your payday loan should be applied to medical bills, car repairs or other sudden short-term expenses.

Use your cash advance for what it was intended for, pay it back in full and on time, and you'll find payday loans can be one of your best financial allies. Save your spare change for the margaritas -- we bet even the CFSA would drink to that!

Related Story

-***-

Wednesday/April 23/2008

PAYDAY LOANS GET FEDERAL RESERVE APPROVAL

A study by the Federal Reserve Bank of New York concluded that payday loans are "not predatory" and may actually improve the lives of the people who use them.

“To the contrary, the report concludes that payday lenders may actually enhance the welfare of households by increasing the supply of credit,” said Darrin Andersen, president of the Community Financial Services Association of America.

Some key conclusions of the study:

“[Credit]...delinquency rates were marginally lower for risky households in states with unlimited payday loans.”

“Households with uncertain income who live in states with unlimited payday loans are less likely to have missed a debt payment over the previous year.”

“In the end, the simple fact that payday lenders have triumphed over pawnshops suggests that payday lending raises household welfare by providing a preferable alternative.”

Related Story

-***-

Archived News: 1, 2