FDIC Study Says Payday Loans are Cheaper than Overdraft Fees

Report confirms facts

In November 2008, the FDIC released a report called Study of Bank Overdraft Programs. While payday lenders and their customers have known for years that taking out a payday loan is cheaper than overdrawing your bank account, this study calls attention to this fact.

Fee comparison

Lawrence Meyers from Blogger News Network shares an example of what this report shows. He reports that the average amount obtained when bank customers overdraw their accounts is $60. The average overdraft fee? $27. Nationally, the average fee for a $60 payday loan is about $6.

Most banks charge an overdraft fee each time you make a charge on an overdrawn account. So if you use your debit card to buy a cup of coffee when your account is already overdrawn, add the overdraft fee and you’ve got yourself a $30 coffee.

Selective regulation

Meyers also points out that legislators all over the country are calling for restrictions to be placed on payday loan companies. Lawmakers call payday lenders fees “outrageous” and rant about “ridiculous APRs.” However, Meyers notes, no one bats an eyelash when a bank charges $27 for a $1 loan.

The data is astonishing, and unequivocally demonstrates that as consumer activists and grandstanding politicians rake payday lenders over the coals, they ignore the bloodsucking that occurs every time a consumer bounces a check, Meyers writes.

Report encourages responsible usage

Bouncing a check can have some pretty hefty consequences. ... click here to read the rest of the article titled "FDIC Study Says Payday Loans are Cheaper than Overdraft Fees"