Report Critiques Payday Advances, Encourages Role for Banks, Credit Unions

AMHERST, Mass. – Banks and credit unions will make money which help their low- and middle-income customers by providing less expensive options to high-fee pay day loans, relating to Sheila Bair, a teacher at the University of Massachusetts Amherst and composer of the report, “Low Cost payday advances: possibilities and hurdles.” The analysis ended up being funded because of the Annie E. Casey Foundation in Baltimore.

“Payday loans are a incredibly high-cost kind of short-term credit,” Bair says. “The high costs are exacerbated by many borrowers with the item 10 to 12 times per year. These are generally utilized predominantly by those that can minimum afford them.”

A few facets ensure it is economically viable for banking institutions and credit unions to provide options to payday advances, Bair states. Banking institutions and credit unions curently have the workplaces, loan staff and collection mechanisms, and so they can minmise credit losings by using direct deposit and deductions that are automatic payment.