“Overdraft charges bring in big-time revenue for banks and represent one of the biggest slices of the short-term unsecured credit market — bigger than credit card over-the-limit penalties and much bigger than payday loans. Indeed, overdraft penalties are short-term loans, and they can be even costlier than their payday cousins.”
“Michael Flores, CEO of Bretton Woods, a consulting firm that works for both payday lenders and banks, estimates that overdraft fees brough in $34.7 billion in revenue for banks and credit unions in 2008, compared with $7.3 billion for payday lenders.”
These quotes were pulled out of the Huffington Post. Bank over draft fees are a big reason payday loans are in such high demand. Just on the Internet, payday loans and related keywords was searched over 750,000 times according to Google. If we factor in Yahoo and MSN it’s probably over 1,000,000 searches. This is just the Internet. Let’s not forget the brick and mortar operations.
Consumer groups are constantly attacking payday loans, but they never address the demand side of short term cash. These groups think they’re helping people, but their doing two things to hurt them:
- Forces payday loans underground and offshore.
- Inhibits personal responsibility or promote financial literacy.
If you want to read reports on the validity of payday lending, you can view them here on PDL Industry.
