The city of Beaverton is close to cracking down significantly on payday loans. An editorial in The Bend Bulletin, however, states that such cash advance regulations are better left to the state of Oregon, as opposed to each city. Let's paraphrase the article …

Bend, like many communities across Oregon, is home to a variety of payday loan lenders, companies that lend the cash-strapped enough money to tide themselves over until the next paycheck.

Problem is, the industry has a well-earned reputation for predatory tactics, so much so that the Oregon Legislature approved tough new payday advance restrictions in April. Now the city of Bend may decide to go still further. In this case, it should leave the job to the state.

Clearly, the process of applying for online cash loans is not high-finance banking - and payday lenders do not generally draw savvy, well-educated customers. Rather, women working their way off welfare, men and women in the military and others with little or no savings are most likely to borrow in this fashion.

Worse, they're least likely to be able to pay back the full payday loan when it comes due, and when they fail to do so and a loan is turned several times, they may find themselves paying as much as 400 percent interest rates as a result.

(more…)

Dollar Financial Corp. announced the introduction of a new short-term loan product for its Texas stores. The company will be using a "credit services organization" model as it phases out activities as a marketer and servicer of bank-funded payday advance loans.

"Today's announcement is a continuation of our commitment to offering a diverse set of products that meet the needs of our growing customer base," Jeff Weiss, the Company's Chairman and Chief Executive Officer, said.

"Customers at our Texas locations look to Dollar to provide financial products, which assist them in meeting their short-term financial obligations. Furthermore, this arrangement enables us to do this with the speed and convenience our customers have come to expect."

On June 20, the Company began acting as a credit services organization at its six payday loan stores in Texas. As a credit services organization, the Company receives a fee from customers for completing loan applications and issuing letters of credit for loans of up to $1,000 from a third party lender.

It can be understandable why students may need payday loans. They leave school with graduate debt and little income.

However, it's most distrubing that the levels of debt among sixty-somethings rose sharply in Great Britain last year, according to a report published this week by a leading debt charity.

The average sum of money owed by over-60's who contacted the Consumer Credit Counselling Service (CCCS) for help rose by 25 per cent to 33,568 pounds. Some of these individuals suffered from payday loan use — while others could actually benefit from such cash advances.

On average, people who undertook a CCCS debt management plan - under which interest on debt is frozen in exchange for a set amount being repaid each month - owed an average of 30,763 pounds during 2005, up from 29,340 pounds in previous years.

Cases of extreme debt have also worsened. Applications for no fax payday loans may soon be on the rise. Stuart Glendinning, Managing Director of www.moneysupermarket.com, a price comparison website, said:

"It’s no surprise that debt levels are rising and that increasing numbers of people are getting into difficulty, but it is disheartening to discover that it is the older age groups whose debt is rising the fastest. This report is a fresh reminder that debt crisis is becoming more and more of an issue."

It may be time to at least consider bad credit payday loans in order to deal with various problems.

A measure that could change the rules governing sales of life insurance policies and other products such as military payday loans to members of the U.S. armed forces won unanimous approval from the Senate Banking Committee.

The Senate military sales bill, S. 418, contains a stronger set of consumer protection provisions than a similar bill passed by the House in June 2005.

It is likely to face prompt Senate floor action, possibly before Congress adjourns for its July 4 recess.

If the bill passes, leaders will have to set up a conference committee to resolve differences between the House and Senate versions.

Supporters of the changes in the military sales rules hope a conference committee will set to work before Congress starts its month-long August recess. S. 418, also known as the Military Personnel Financial Services Protection Act, was introduced by Senators Michael Enzi, a Wyoming Republican, and Hillary Clinton, Democrat of New York State.

Advocates of the bill say it would make reforms that would help regulators on the state level and the U.S. Department of Defense police sales to the personnel on military bases and eliminate unfair and/or deceptive financial services to members of the armed forces.

(more…)

While payday loans offer prompt access to cash to consumers under the direst of circumstances, paying off debt is the best way to assure that you'll never need these resources.

So why can't people do it?

The premise is simple. All you need to do is earn more than you spend, and apply the savings toward paying down debt. But most Americans these days find paying off credit card debt exceptionally hard. A great many of them are fighting a losing battle, and may end up strapped for cash in the worst way.

• Consider that 57 percent of all credit card holders carry an outstanding balance.
• Among families that have at least one credit card, the average balance is a staggering $9,313.
• Ten years ago it was $4,301.

"People are out of control," says Howard Strong, a consumer attorney.

And it's taking a toll. According to a survey of 1,500 consumers by Consolidated Credit Counseling Services, a whopping 71 percent said debt is making their home life unhappy. Part of the problem is that the credit card companies have made it easier than ever to carry balances.

"People are addicted to minimum-payment crack," Steve Rhode, co-founder of the debt counseling service Myvesta, said.

(more…)

Despite talk of a payday loan revival in North Carolina, it doesn't appear likely that cash advances will return to the state.

Therefore, in an attempt to help those in need, North Carolina's top bank regulator is championing a new way for banks to work with people who have bad credit.

"We're trying to develop a basic checking account that meets banks' profitability standards but does not gouge consumers with fees," said Joe Smith, the State Commissioner of Banks.

Until recently, those with a troubled credit history credit turned to instant payday loan lenders for small loans, usually just enough to cover bills until their next paycheck. With payday loan lenders banished from the state this year for charging exorbitant interest rates, some consumers have ended up on the wrong side of banks:

They have trouble qualifying for bank loans, often don't qualify for overdraft protection and end up getting charged fees of $25 to $35 for every bad check they write.

Smith envisions an exclusively card-based "checking" account - NO checks at all - that would prevent users from taking out money or making purchases that would overdraw their account. This would certainly take the place of savings account payday loans.

(more…)

"This is just another cynical attempt to circumvent the Pennsylvania small-loan cap that prevents companies from fleecing state consumers."

Those were the words of Jim Swoyer, of the Pennsylvania Public Interest Research Group (PENNPIRG), in response to the reemergence of Advance America in the Keystone State.

According to the Pittsburgh Post-Gazette, the state Banking Department is trying to determine if the controversial loan offered by the payday giant — its new "Choice" line of credit allows borrowers up to $500 a month for a $150 participation fee — is legitimate.

Department spokeswoman Heather Tyler called the product "a really bad deal for consumers."

Advance America and similar bad credit payday loan firms earn fees for originating short-term, high-interest loans financed by regular banks, then collect payments for the banks. Generally, the payday loans are unsecured and made for only about 15 days.

The company says its prices reflect the cost of its high-risk business, and that its products help people who have nowhere else get cash quickly. On the flip side, its critics say borrowers often are unable to pay spiraling fees and interest on no fax payday loans, making them a huge detriment and hardly convenient.

The FDIC has also investigated Advance America's practices in Arkansas, while the company was forced to suspend its lending business in North Carolina in December when that state's banking commissioner determined the company's high interest rates were illegal.

The Arkansas legislature may not be ready to do away with payday loans, but the state has expanded a payday loan lending lawsuit to include two more storefront lenders accused of charging exorbitant interest rates on loans, the attorney general's office announced Wednesday.

The action added Money in A Flash.net payday loan locations in Little Rock and West Memphis to the lawsuit filed Feb. 28 against the firm's Jonesboro location. The attorney general's office also said it filed a separate lawsuit against MagnoliaMoney.net, a similar operation in Magnolia.

All outlets in question aree accused of charging annual percentage rages of up to 520 percent on their payday cash loans of $100, $200 or $300, disguising these fees as rebates. Customers were required to pay biweekly payments to the company - and if payments were not made on schedule, the money was withdrawn directly from customers' bank accounts, according to the state.

The lawsuit accuses the faxless payday advance companies of misrepresenting the contracts as agreements for Internet access instead of high-interest loans. The attorney general's office is seeking an injunction to stop the payday loans, restitution for consumers and civil penalties.

The nation's largest payday loan company accounted that its subsidiary in Pennsylvania has begun offering consumers in that state a new financial service. Advance America will provide what is called the Advance America Choice-Line of Credit, a service allowing customers access credit lines of up to $500 for a monthly participation fee, plus interest on outstanding loan balances.

"We are pleased to offer consumers in Pennsylvania another alternative to help them meet their periodic short-term financial needs. The new Line of Credit offering is part of Advance America's ongoing commitment to provide products and services to hard-working Americans who occasionally need additional money and whose needs are underserved by banks, credit card companies, and other traditional financial institutions," Ken Compton, President and CEO of Advance America, said.

The payday loan conglomerate used to operate as a marketing, processing, and servicing agent in Pennsylvania, offering fast payday loan products as well as installment loans. Amid regulatory changes by the state, the company discontinued its payday loans in Pennsylvania as of March 27, 2006.

The change in Pennsylvania leaves Arkansas as the only state where Advance America still operates as an agent for an FDIC-supervised institution. The Company previously announced it has discontinued offering installment loans in Arkansas and intends to discontinue offering short-term, no credit check payday loan products in that state on June 24, 2006.

Student loan debt is a problem outside the U.S., too. In Canada, recent graduates are being urged to spend their new paychecks wisely. Set a budget, states a recent Toronto Sun article.

New grads often make commitments based on their gross annual salary and are shocked when they see their take-home pay. As a result, they're forced to consider supposed fiscal saviors such as payday loans online.

"Creating a budget is a tool, not a financial handcuff," says Debby Fowles of about.com financial planning guide.

Begin by taking a hard look at your discretionary spending, such as cellphone packages and expensive jeans, along with non-discretionary expenses such as food, rent and transit pass, advises Alexis Mantell of RBC Royal Bank in Toronto. Don't be tempted by a quick payday loan fix if problems arise.

"Financial planning should revolve around cash flow," Mantell says. "Determine a monthly student debt re-payment amount that will allow you to live comfortably while making a significant dent in your debt load. Synchronize your loan payment date with payday to ensure it always gets paid off the top."

Look for ways to reduce your cost of borrowing. If you're carrying a credit card balance each month, or you're short of cash and have overdraft protection on your bank account, consolidate all debt into the vehicle with the lowest rate of interest - likely a line of credit. Only consider a quick cash loan if you must. Set a goal.

"Determine a time line for completion of repayment. Set aside a small fund to reward yourself for meeting that milestone," Mantell says.

Your payment period will depend on the amount of debt outstanding and how it's negotiated. It will also have a lot to do with the type of job you possess and your living situation. A single working professional can lower balances more quickly than one who is married.

Moreover, those having difficulty making payments may be eligible for interest relief. If your application is approved, the government will pay the interest on your student loan for a period of time, possibly as long as 36 months, Mantel says. This would be another cash advance alternative.