Bank Payday Lending
"CBS This Morning" interviews CRL's Rebecca Borné on predatory payday lending by banks.
Victory: Two Regulators Clamp Down on Bank Payday Loans
The movement to stop debt-trap lending by banks has taken a huge step forward: the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) issued guidance directing their banks to asses borrower’s ability to repay and limit repeat lending. With these common-sense restrictions, debt-trap payday loans should quickly become a thing of the past for banks supervised by the FDIC and OCC.
Fifth Third Bank and Regions Bank—supervised by the Federal Reserve—continue to push payday products. We urge the Federal Reserve to follow the example of the FDIC and OCC and issue the same guidance to their banks, and we hope the CFPB will move ahead to issue sensible rules restricting payday lending.
"Banks must remain steadfast in preventing this kind of [payday] lending and find more suitable, transparent, and sustainable products for these customers."- Sr. Nora Nash, Sisters of St. Francis of Philadelphia
Ranking the Banks: A Survey of Seven US Bank Conducted
by Members of ICCR and Sustainalytics
A Bad Deal, not a Solution
Banks defend their payday lending by saying these loans are not for regular use, but CRL’s State of Lending research shows that the loans are designed to produce repeat borrowing. Bank payday loans:
- Come with excessive costs. The average APR ranges from 225% to 300%.
- Create a cycle of debt. In 2011, over 1/3 of borrowers took out more than 20 loans.
- Hit seniors hard. Over 1/4 of all bank payday borrowers are Social Security recipients.
Our press release summarizes findings from the State of Lending report.
Is/Was Your Bank a Payday Lender?
Have you had a Direct Deposit Advance from Wells Fargo, a Checking Account Advance from US Bank, an Early Access Now advance from Fifth Third Bank, or a Regions Bank Ready Advance? Find out which banks have been pushing payday loans and where.
Learn More about Bank Payday
Want to understand how bank payday lending works and why it's harmful?
- Bank Payday Lending Basics (February 2012 slideshare)
- Watch our “Bank Payday Lending Basics” (February 2012 webinar)
News and Views on Bank Payday Lending
- CRL President Mike Calhoun responds to Fifth Third Bancorp's defense of payday lending
- CRL's Rebecca Borné testifies before the Senate Special Committe on Aging on how payday loans affect senior citizens.
- Comment letter: CRL and allies urge the FDIC and OCC to proceed with their crackdown
- CRL research: “Triple-Digit Danger: Bank Payday Lending Persists” (March 2013)
- Read the letters from numerous community groups and lawmakers who oppose bank payday lending
- Bank payday lending in the news (Storify)
- Overview of Media and public concerns (March 7, 2013)
- Dr. Frederick Haynes calls on banks to stop playing predatory payday lenders.
- Consumer groups call for regulators to end the abuse before it becomes business as usual.
- CRL’s payday lending research and our July 2011 report on bank payday loans
- In response to the sign-on letter, the FDIC promises to investigate banks making payday loans.
- CRL and NCLC: Stop all federal credit unions from making payday loans