Punitive fees for bounced checks have reached a record high of $27.40, according to Community Financial Services Association of America (CFSA), citing Bankrate.com's Fall 2006 Checking Survey.
CFSA, the trade group for the payday loan industry, said the survey calls into question the real difference between predatory lending and traditional financial services.
"Critics of the payday lending industry hype the "triple-digit APRs" as a reason to limit or prohibit payday loans, but the Bankrate survey results underscore what the payday lending industry has always said, that the cost of a bounced check typically exceeds that of a payday loan," said the CFSA-the trade association representing the payday advance industry. "In fact, when expressed as an APR on identical two-week terms, a payday advance compares favorably: $100 payday advance with $15 fee equals $391% APR; $100 bounced check with $27.40 fee equals 714% APR. The average $26.64 merchant fee (CFSA 2006 National Fee Survey) brings the bounced check APR to 1,409%."
Research shows customers recognize payday advances can sometimes be their best option for low dollar short-term credit-understandable, given the rising punitive fees associated with checks drawn against nonsufficient-funds, bounced checks covered by "courtesy overdraft protection" and late payments on credit cards and other routine bills.
For info: capwiz.com
