Banks pitch payday loans as short-term borrowing that allows their customers to deal with a financial emergency, repay the loan, and move on. In fact, CRL's research shows that their triple-digit interest rate loans trap borrowers in a long-term cycle of repeat loans.
Banks continue to claim that their payday products are intended for short-term emergencies, but this report shows that short-term loans are not typical. Although some participating banks have made small, recent changes in the product, bank payday loans are continuing to trap borrowers in high-cost, triple-digit debt.
Key Findings
- Bank payday loans carry an annual percentage rate (APR) that averages 225 to 300 percent.
- In 2011, average bank payday borrower took out 19 loans.
- Bank payday borrowers are two times more likely to incur overdraft fees than bank customers as a whole.
- Over one-quarter of all bank payday borrowers are Social Security recipients.
Find out more about bank payday lending.