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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!
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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?"
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Thursday/May15/2008
ATTORNEY CALL-OUT HIGHLIGHTS PAYDAY LOAN MYTHS
The Community Financial Services Association of America's recent selection of an Ohio attorney as “winner for most untruths” highlighted some popular misconceptions about cash advance lending.
Besides alleging that payday loans go to those in "extremely bad financial shape" the attorney claimed that "responsible" lenders would steer clear of such customers -- despite the fact that cash-loan applicants must by rule maintain bank accounts to begin with. (This is particularly relevant as Ohio is considering legislation that would severely restrict the rates that payday lenders could charge customers.)
It is not known whether the attorney in question responded to receiving such an honor.
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Wednesday/July 30/2008
NEW HOUSING LAWS TO BENEFIT LOWER-INCOME EARNERS
In response to the recent housing-industry crisis, new legislation is expected to be signed by President Bush, including a trust fund to help protect low-income housing. "The funds (from the trust) would be allocated to the states, which would use the money to produce and preserve affordable housing focused on the lowest-income households," said Linda Couch of the National Low Income Housing Coalition. Couch said the fund could surpass a half billion dollars by the year 2011.
The average national rate on a 30-year fixed-rate mortgage climbed to 6.63 percent this week, forcing many lower-income Americans to seek short-term loans and other quick sources of financing. This includes cash advances, as many borrowers seek to leverage their next payday.
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Friday/June 27/2008
LATE PAYMENTS THROUGH THE ROOF, SAYS AMEX
The number of Americans paying their credit-card bills late is on the rise, according to American Express.
"Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations," said company CEO Kenneth Chenault. American Express adopted a "cautious view" after cardholder spending slowed and overdue payments rose in December.
As credit conditions worsen, more Americans are turning to alternate sources of funds such as cash advances -- which can be repaid quickly, allowing the borrower to avoid high interest payments. Payday advance applications are expected to increase as Americans find paying their bills increasingly challenging.
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Friday/June 20/2008
CASH ADVANCES RISE AS AMERICANS CUT BACK ON CREDIT
Once crazy for credit, Americans have been cutting back on the use of their cards -- or in some cases, cutting them to shreds.
Tired of paying for purchases made long ago (such as gas or a restaurant meal), people such as "Suzi" from Indianapolis have decided to go cold turkey, and closed their credit-card accounts. "If we want something (now), we pay for it in cash," she says. "If we can't afford it, we do without or wait."
The upside? "We no longer have to dread our bills in January," says Suzi.
Not surprisingly, this corresponds with the increase in payday advances taken out, as many people have found the single short-term fee preferable to ongoing interest charges.
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Thursday/June 12/2008
CREDIT CARDS FOR SUBPRIME CUSTOMERS FACE NEW SCRUTINY
Credit cards issued to customers with lesser credit are facing a new round of regulations designed to protect the cardholder from being overcharged.
These typically low-limit cards, sometimes known as "fee harvesters" because of their financial benefits to the issuer, carry fees and charges that aren't always readily obvious to the cardholder. However, there are signs that the gold mine may be closing, as the proposed regulations would require creditors to list fees upfront, especially if they exceed 25 percent of the customer's credit limit. Additionally, card issuers would have to include examples of the projected change in balance once these fees have been assessed.
Such developments should be of note to payday loan seekers, many of whom fall into the subprime category.
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Friday/June 6/2008
PAYDAY LOAN RESTRICTIONS TREAT CONSUMERS "LIKE CHILDREN"
An article in the Montgomery Advertiser summed up recent efforts by certain states to restrict -- or even outlaw -- the availability of payday lending:
"Paternalism -- the belief that adults do not possess the ability to take care of themselves -- is the ideology behind bills being pushed in a number of state legislatures. By putting incredibly stringent restrictions on the service, such bills would effectively ban the practice of short-term "payday" lending, no matter how many people use it responsibly in times of crisis."
And the benefits of payday lending?
"The service allows consumers to borrow against a future paycheck, meaning that the car gets an urgent repair, a critical check doesn't bounce, or the heating bill gets paid. Used responsibly, payday lending can help a borrower stave off financial calamity."
We couldn't have said it better ourselves.
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Friday/May23/2008
Wedesday/May28/2008
SALT LAKE COUNTY GETS SALTY WITH PAYDAY LENDERS
In what was called a "classic debate," the Salt Lake County Council voted to approve legislation that would limit the number of cash lenders to one per every 10,000 county residents. Additionally it required physical loan shops to maintain a specified distance apart from each other, to limit density.
One council member who voted for the ordinance nevertheless had his doubts about its effectiveness: "What we do here doesn't fix the rate problems, it just grants local monopolies and makes it even harder for the real issue of rates and disclosures to be addressed."
Ten cities in the already maintain legal restrictions on payday lending.
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Friday/May23/2008
THOUSANDS GATHER TO SHOW SUPPORT FOR PAYDAY LENDING
More than two thousand payday loan customers and lenders rallied in Ohio to protest severe restrictions proposed by that state's Senate on cash advances.
Holding signs such as "My life. My credit. My choice!" the payday loan supporters voiced their concern over a bill that would severely limit the credit options of working people -- not to mention cut some six thousand jobs.
"No business, not a credit union, not a bank, not even a non-profit can lend money for less than 10 cents a day," said Jamie Frauenberg, President of the Ohio Association Financial Service Centers.
Commenting on proposed limits on fees and interest charged by payday lenders, Frauenberg added: "Even Goodwill could not offer payday loans in Ohio under a 28% APR cap."
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