This describes Kansas City payday loans and how bank overdraft fees are similar to short term loans
Nearly 70 million Americans are unbanked with no traditional bank account or underbanked. That means they do not or cannot access most banking services. The bank industry has shut out millions of consumers with high fees for almost every service. And they’ve imposed strict requirements for consumers to borrow money.
Kansas City pay day loans have been criticized in the media for their high annual percentage rates (APRs). However the fact remains that an APR is a measurement of a loan’s cost over one year. Whereas payday loans typically have a two-week term instead. For millions of consumers, there are few short-term loan alternatives. Banks have almost entirely retreated from the small-dollar lending market. They have instituted stringent underwriting standards that makes it impossible for many consumers to qualify for a loan.
Bank Overdraft Fee = Short Term Loan
Banks criticize small-dollar Kansas City payday loans providers, but banks also offer their own short-term, high-interest loan product. This is called an overdraft fee. Consumers who have a checking account with overdraft protection can charge more to their account than their balance. Checks or transactions that would normally bounce or get returned with non-sufficient funds are then covered by the bank. The consumer must repay the overdrafted amount along with an overdraft fee. The average overdraft fee is $29 but some banks charge even more.
Many banks advertise overdraft as a form of protection for transactions that inadvertently exceed the customer’s balance. Some banks advertise bank overdraft as an unsecured line of credit to manage cash flow issues,.. just like payday loans.
Consumers Spend More on Bank Overdrafts vs. Kansas City Payday Loans
In 2010, the payday loan industry reached $30 billion. Consumers spend more on bank overdrafts than they do on payday loans. Banks took in about $38 billion in overdraft fees in 2010 alone. That’s more than 3x that of payday loans. Under the law, banks can charge checking account consumers up to $140 per day in overdrafts with a separate fee for every overdraft transaction. A consumer who makes just three small-dollar transactions during one day totaling $13 will pay $87 or more in overdraft fees.
Kansas City payday loans are a lower-cost alternative to bank overdraft fees,. They are virtually the same but with a different name. With a payday loan, a consumer pays a single predictable fee for the full loan amount without getting nickel and dimed on every transaction.
Waldo Financial is a leading pay day loans Kansas City provider with a focus on providing cost-effective and flexible payday loans to Kansas City consumers.
In summary, this described Kansas City payday loans and how they are similar to bank overdraft fees.