Cash Advance Loans Undermine The Fee Based Business Model Of Traditional Banks
January 8, 2010 – For the first time in history, the U.S. banking system increased the fees they charged for nonsufficient funds during the middle of a recession. According to research completed by Moebs Services in 2009, nearly half of all banks are receiving a higher income from overdraft fees than their total net earnings and that industry wide, financial institutions will have made more than $38 billion in revenue from them. This fee based business model has been one of the biggest factors in the financial sectors abhorrence of consumers using Cash Advance Loans to avoid NSF and late fees.
On November 12, the Federal Reserve issued a press release detailing the new overdraft services opt-in rules that all banks will be required to follow starting July 1, 2010. With the potential to lose billions in revenue, many banks have increased their NSF fees even further with the highest overdraft fees currently resting around $35 per overdraft, while bounced check fees are exceeding the $35 mark. Meanwhile, the same banks who have called the payday loans market a predatory lending service are building their own short-term credit products.
In multiple studies conducted over the past five years, it has been found that the average cash advance loan customer is not an uneducated, low-income earner, and that most clients have investigated other options, but still chosen to take the short-term loan. Most consumers, regardless of their earning bracket, find that payday loans, with an average fee of less than $20 per $100 borrowed, are better than the overdraft fees charged by banks regardless of the amount being “borrowed”.
The most common complaint levied against cash advance loan lenders is based on a high estimated APR percentage. What many fail to realize is that the bank’s actual earned income over the average life of a payday is less than 20%, while a traditional bank’s long term loan gains 30 to 250% or better. While the APR of payday loans are higher, 390% for $100 with a one-time $15 fee, a fixed rate mortgage payment of $100K at a 5% APR will cost the borrower $188,010.88 over the lifetime of the loan.
About the Company: Speedy Cash is a short-term lender with over 11 years of experience in the Payday Loans field. Having helped many individuals to avoid the high cost of overdraft banking fees, Speedy Cash has gone beyond offering allowing individuals with low credit scores to cash their paychecks and providing a Cash Advance Loan when necessary. With the help of Refinement Services LLC, Speedy Cash is giving families a new option to reduce their debt load by purchasing old, unwanted gold and platinum products at top dollar.
Contact:
Speedy Cash / Rapid Cash
3527 N. Ridge Road
Wichita, KS 67205
1-800-273-5602
