NCLC Applauds End of 650% MetaBank Prepaid Card Payday Loan
by October 26, 2010 11:36 am0
Market reverberations from the shut down of MetaBank’s iAdvance hybrid prepaid/payday loan card continue. The National Consumer Law Center was among the more recent to comment on the situation.
“The OTS should be applauded for shutting down this abusive product. We hope that other regulators will follow suit to stop triple digit lending that is designed to be unaffordable and is based on the bank’s ability to seize the consumer’s benefits or wages and not the consumer’s ability to pay,” said Lauren Saunders
, Managing Attorney of the National Consumer Law Center’s DC office.
Of major concern, of course, is the cost of advances when they are tapped on these cards, especially when translated into an A.P.R. As NCLC calculates it:
The advances cost $2.50
per $20
borrowed and are repaid automatically with the next direct deposit, whether one or 30 days later. The minimum APR is 120%, but if the loan is taken out a week or less before payday, the loans would cost at least 650% APR.
Other insitutions offer similarly structured products, and are considered by some banks as an alternative to lost overdraft fee income.
Read full article: http://www.prnewswire.com/news-releases/nclc-applauds-end-of-650-metabank-prepaid-card-payday-loan-104963859.html