A new CRL report describes how banks are adding payday loans to their arsenal of predatory loan products. These loans drain cash from cash-strapped Americans, often social security recipients.
The banks are making loans to their checking account customers based on the customer’s direct deposit paycheck. The fees are high and the entire principal is deducted on payday, which, like payday lending, forces most customers into a long-term cycle of borrowing that systematically strips them of their funds.
The bank payday loan rates mean consumers are paying over $900 in interest to borrow $500 from the bank for less than 6 months.