Banks Urged to battle Payday Lenders With Small, Lower-Cost Loans

Banks Urged to battle Payday Lenders With Small, Lower-Cost Loans

Those that end up pinched for money often look to high-cost payday lenders. But conventional banking institutions and credit unions could serve that role for borrowers and take action at far lower prices, based on a proposal that is new the Pew Charitable Trusts.

At this time, an incredible number of customers who require money fast — say, to pay for a unanticipated vehicle fix or even avoid having their utilities shut down — usually become borrowing a couple of hundred bucks from loan providers who offer an advance or their paycheck or hold their vehicle games as security. Such businesses frequently charge high fees and punishing interest levels, dragging borrowers right into a cycle of debt that’s hard to split, stated the report posted by Pew on Thursday.

“Borrowers require a significantly better option,” Alex Horowitz, senior research officer with Pew’s customer finance task, said in a call this week with reporters. Pew has been doing research that is extensive “underbanked” consumers, whom usually move to payday loan providers. Continue reading “Banks Urged to battle Payday Lenders With Small, Lower-Cost Loans”