Wells Fargo Receives Flak for Continuing Payday Loans

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By , Staff Writer
Posted on Mon Dec 10, 2012, Last Updated on Mon Dec 10, 2012

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Wells Fargo’s “Direct Deposit Advance” loans receive flak from advocacy groups who claim the bank’s Community Reinvestment Act rating should be lowered for continuing to offer those loans, according to The Consumerist.

Direct Deposit Advance loans are high-interest loans offered to customers with certain checking accounts at Wells Fargo. The loans are offered in advance of the customer’s next direct deposit, at the current interest rate of $1.50 per $20 borrowed, netting out to a 120% APR.

Advocacy groups Center for Responsible Lending and National Consumer Law Center say these loans lend themselves to repeat borrowing and long-term debt, and despite not being called payday loans, act very much like payday loans.

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