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Our Troops from Payday
Loan
Sharks!
End
The Payday Loan Debt Trap
in NC - Help Stop Senate Bill 947
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947 - Latest News & Updates
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Lending News Archives
Too Much Month at the
End of the Paycheck
A book that shares
intimate stories of
individuals caught in payday loans.
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Payday loans are
small, short-term loans that charge high interest rates.
People who receive payday loans write a postdated
check that is held until their next paycheck, generally
two weeks, and receive cash today minus the loan fee.
In North Carolina, payday lenders charge from
$17.50 to $23 for each $100 lent and the average loan
term is 12 days. The
APR on a two-week loan ranges from 456% to 600%.
“In a way they are
doing a favor for people, but in the long run it’s not
a favor…It’s not designed so you can get yourself
together – it’s designed for you to come back to
them.” – Larry Smith, payday loan borrower
The
loans become abusive when borrowers have to get a new
loan to pay an old one. In North Carolina, more
than half of payday loan customers take out 6 or more
loans from in a year and more than a quarter of the
borrowers take out 12 or more loans in one year.
Contrary to industry
claims that the loans are for emergency use, the payday
lending business model depends on repeat transactions to
generate revenue. In
North Carolina, payday lenders made 85% of their revenue
from borrowers making 6 or more transactions a
year. Customers making 13 or more loan
transactions in one year generate over 50% of the
revenue.
In 2001, after a
four-year experiment with payday lending, the North
Carolina legislature allowed the law authorizing payday
lending to sunset. However,
payday lenders have affiliated with out-of-state banks
to evade state consumer protection laws that cap annual
interest rates at 36%.
The Comptroller of the Currency and the Office of
Thrift Supervision have ended the partnerships between
payday lenders and national banks and thrifts based on
safety and soundness concerns.
As a result, state-chartered banks regulated by
the FDIC and Federal Reserve Board have stepped in and
partnered with payday lenders to export interest rates
and circumvent state laws regulating payday lending.
CRA-NC is working to
shut down the “rent-a-bank” partnerships on a
national level by engaging the FDIC in policy
discussions and by targeting the state-chartered banks
with protest actions and media campaigns. |
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Lending Advocacy |  | |
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Sharks
drive to the basket on the Peeps
Season Review
Game
highlights
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Keys
to the Game
For the Peeps
FDIC Officials: Peeps need officials to declare their banks ineligible to play with payday lenders.
Justin Fair: Needs to stay healthy, avoid injuries, and outplay his size.
Les Cash: Needs to keep his head in the game and resist the Sharks’ dangerous offers of fast and easy cash.
For the Sharks
FDIC Officials: Sharks need the officials to continue to turn a blind eye to violations of state law, ignore previous bad acts, and postpone drug testing.
Advance America: As point guard he sets the stage with his
bad example.
County Bank and Republic Bank: Need to stay out of foul trouble to stay in the game.
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In North
Carolina, tens of thousands of people are caught in a debt trap of payday loans — they pay more in fees than they borrow in principal.
Loans of up to $500 have effective interest rates of more than 400% and typically are due in less than 14 days.
If borrowers can’t catch up they renew the loan again and
again. In response, CRA-NC has created Payday
Lending - The Musical, a video that shares personal stories and the
impact of payday lending on the community. If you would like a copy of
Payday Lending - The Musical, please contact our
office at (919) 667.1557 x 23.
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