Pay Day Loans - Are They A Crime?Written by Randy McClure
No, but Consumer Federation of America calls pay day loans legal loan sharking.It Is A Fee, Not Excessive Interest. Pay day loans are legal in most states because they are charging you a fee, not an excessive interest rate. Excessive interest rates are illegal in most states. Outrageous Credit. Pay day loans are an outrageous form of credit. For example, let's say you write a personal check for $115 to get $100 for up to 14 days. The $15 fee equates to a 391% annual percentage rate (APR). This APR keeps going up if you extend “loan” week after week. Bad Debt vs. Bounced Check. Worst yet, if you are not able to honor your check it is not a bad debt, it’s a bad check with associated non-sufficient fund (NSF) fees from your bank. Then to top it off, your local district attorney’s office may get involve acting as a collection agency for bad check you wrote. What Are The Alternatives To Pay Day Loans? Loan Shark? “I just need enough cash to tide me over until payday.” Please resist pay day loan. The pay day loan offer is preying upon your unfortunate circumstances, be it innocent or through your poor choices. Before taking out a pay day loan, ask yourself would you consider going to a loan shark with high interest and unhappy consequences of not paying them back. Friends, Family, Community? What can you do? If your unfortunate circumstances are innocent, consider going to your family, friends, church, community organizations or alternative forms of credit for help. If you are making poor choices in regard to money and options above are not working, here are some options:
| | Credit Traps Snag ConsumersWritten by Gerri Detweiler
Nearly 20 years ago I worked for a small consumer advocacy organization in Washington, DC. Each week we received sacks full of mail from consumers across country requesting our list of credit cards with low interest rates and no annual fees. If you wanted a low interest rate on a credit card back then, you often had to apply to a bank in Arkansas where interest rates were capped by state law. Those were good old days. Now, interest rates range from zero percent to a high 39 percent. But it’s tougher to find (and keep) a good credit card than ever before. That’s because there are many new traps that can snag unsuspecting consumers. At top of list is “universal default clause” which allows issuers to monitor you credit report and raise your rate if you are late on any bill that appears on your credit report. One major issuer, for example, will hike a 0 percent rate to 24.99 percent if you slip up! In fact, true “fixed rates” are rare. Many consumers don’t realize that a “fixed” credit card rate isn’t same as, say, a fixed-rate mortgage. In most states, card issuers can raise interest rate on a fixed-rate credit card with just fifteen days’ written notice. The new rate can typically apply to existing balances as well as new purchases. Fees are also on rise. Take late fees, for example, twenty years ago a late fee on a credit card was still fairly unusual, and typically wasn’t charged unless you were 15 days late with a payment. Now you often must get your payment to issuer by a certain hour in morning or you’ll be charged a late fee of as much as $39. Go over limit and you’ll not only pay more interest, but a steep over limit fee as well. Foreign travelers are often charged a “currency conversion charge” of 1 – 2 percent of amount of their purchase. As result of a class action lawsuit, Visa and MasterCard were ordered to provide refunds of those fees in certain circumstances. The problem wasn’t that fees were illegal, but it was determined they weren’t properly disclosed. The case is being appealed. Here are some findings from nonprofit Consumer Action’s annual survey of credit cards (www.consumer-action.org): • The vast majority of surveyed cards have significantly higher penalty rates that are triggered by one or two late payments in a period of six months to a year. • One-fifth of surveyed issuers have shifted to tiered late payments, which Consumer Action interprets as a deceptive way of charging higher-than-average late fees.
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