CRL in the News

Yasmin Farahi and Lucia Constantine from the Center for Responsible Lending discuss the promises and perils of Earned Wage Access programs. Discover how these fintech products operate, the financial traps they can create, and the regulatory debates shaping their future.

“Unfortunately, this [loan] comes with terms that place a crushing burden on the university's future, a burden that is simply unsustainable,” said Jaylon Herbin with the Center for Responsible Lending.

Many Americans continue to find it challenging to keep up with the rising cost of living. Despite economic reports attesting to a growing broad economy, the majority of Americans’ household finances feel insecure – especially people who live paycheck to paycheck with little or no savings.

Popular apps that provide cash advances for working people are trapping Minnesotans in a cycle of borrowing and repayment and increasing the rate of bank overdraft fees, according to an analysis by the Center for Responsible Lending.

In Minnesota, two-thirds of users of the apps — known in the industry as “earned wage access” apps — experienced increased overdraft fees after borrowing money. The average user overdrafted their bank account more than 9 times in the three months after their initial payout, according to the analysis by the Center for Responsible Lending. Rather than charging exorbitant interest...

“Earned wage access, or earned wage advance, is a marketing term for a loan,” said Monica Burks, a policy council at the Center for Responsible Lending. Burks said fees to get instant cash can be sky-high when expressed as an APR and that apps can trap workers in a pattern of repeat use.

“These lawsuits reinforce an oppressive student loan repayment system that favors the interests of big businesses at the expense of low-income borrowers and borrowers of color,” said Nadine Chabrier, Senior Litigation and Policy Counsel at the Center for Responsible Lending. “By choosing to protect the profits of exploitative loan servicers over students seeking relief from excessive loan repayments that limit...

It is encouraging that the market for solar power is sizable and expanding exponentially, but as this market grows, we must stop unethical companies from burning consumer rights.

Options include a home equity line of credit, home equity loan, reverse mortgage or home equity investment. The right loan product for you depends on your reason for needing the cash, says Anneliese Lederer, senior policy counsel for the Center for Responsible Lending in Washington, D.C.

In a study published this year, the Center for Responsible Lending found the average APR on pay advances repaid in 7 to 14 days was 367% (compared with 400% for a typical payday loan).