In a recent op-ed, Consumer Bankers Association President Richard Hunt asserts that bank payday loans were a service to customers and argues that they should be restarted. The facts, though, show that while these loans produced huge fees for banks, they were a usurious debt trap for bank customers.
Just a few years ago, banks were making 200%-plus APR payday loans, which they euphemistically called “deposit advance products.” While deposit advances were marketed as a small-dollar, quick fix to a budgetary shortfall, they typically led to an expensive debt trap. These were payday loans, dressed up in a suit and tie.