Wednesday/March26/2008

NEW PAYDAY LOAN BILL PASSES FIRST SENATE TEST

Good news for borrowers: the U.S. Senate has given initial approval to proposed legislation which would make interest rates on payday loans more attractive than ever.

House Bill 1310 would cap rates on cash advances -- as well as limit the transaction fees charged to consumers. The proposed bill also would keep borrowers from extending their loans repeatedly, or taking out multiple loans, both of which make repayment a lot tougher to manage for the consumer.

The bill now goes to the Senate Appropriations Committee for consideration, before returning to the Senate for final approval.

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Wednesday/April 2/2008

TAX SEASON: TIME FOR ANOTHER KIND OF PAYDAY LOAN?

This time of year, Americans' thoughts turn to tax returns. Increasingly, however, more taxpayers are looking at their refunds as a new kind of payday advance.

Sometimes called "Refund Anticipation Loans," these loans amount to cash advances granted to people expecting money back from the government. Giant tax-preparation firms such as H&R Block have become major "lenders" of these advances, which have gained big-time popularity in recent years.

Before you go jumping in, however, consider the consequences. First there's the interest: customers may pay anywhere from fifty to five hundred percent on these loans. Then there are the fees: H&R Block, for example, charges over sixty dollars for a refund payday loan of three thousand dollars.

Above all, keep one thing in mind -- Refund Loan applicants are essentially signing over their refunds to their tax preparer. Bottom line: if you can afford to wait for your money, you might want to do just that.

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Wednesday/April 9/2008

CONTRARY TO BELIEF, BAD CREDIT ISN'T ALL BAD NEWS

A low credit rating isn't something anyone wants -- but it doesn't have to ruin your life either.

Even people with poor credit can get credit cards; they'll of course have to pay higher rates, and deal with stricter rules and terms. But by showing they can make payments on time, these same people can start to restore their financial reputations. And establish the credit needed to get a mortgage or an auto loan.

Likewise, people with bad credit can get access to funds in a crunch. Begin by looking up one or more of the hundreds of online cash advance sites out there. These cash providers not only accept applications from lower-credit types -- they welcome them.

There is hope -- you just need to know where to look.

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Wednesday/April 16/2008

TV COMMERCIALS SPOTLIGHT CASH ADVANCE TAKERS

An ad campaign put a human face on the millions of Americans who use payday cash advances to meet their short-term financial needs.

The commercials, which first aired in 2006, highlighted the diversity of real-life cash advance users -- featuring a paramedic, a gym teacher, a waitress, a bus driver and a shoe salesman. Because the needs of such people are typically too small for a bank loan department, they often find it difficult to get cash when they need it fast. A payday advance helps them get the short-term aid they need.

The campaign addressed the financial challenges faced by many hard-working Americans and ended with the theme line "Because You Advance America."

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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.”

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