The Money Changers Seated At Their Tables
Predatory Lending

1. Payday lending costs Americans $5 billion annually.

2. Payday lending (sometimes called cash advance) is the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan.  These loans are structured so that borrowers typically cannot pay them off, and must keep renewing them for months on end. The interest payments—about $50 each pay period for a $300 loan—never reduce the loan principal.

3. North Carolina refused to renew a payday lending exemption from the state's 36 percent interest rate cap in 2001 when it expired, making the practice illegal again under state law. In 2005 and 2006, the North Carolina Attorney General and Commissioner of Banks enforced the law against payday lenders who tried to evade it through partnerships with out-of-state banks, forcing them to follow the law or leave the state. However, current law allows small consumer loans from banks with interest rates between 25%-54%.

4. In the summer of 2008, AARP reported that bankruptcy among older Americans has doubled since 1991.  As banks raise their overdraft fees and make it easier to hit their account holders with multiple charges, unauthorized overdrafts strip fees from Americans 55 and older at the level of $4.5 billion per year. Nearly $1 billion of that comes from people who are heavily dependent on Social Security income.

5. The average purchase that triggers overdraft fees is $17; the average overdraft fee is $34.

6. Overdraft fees cost Americans $24 billion annually.

7.  According to the Center for Responsible Lending, debit cards are the most frequent trigger for overdrafts even for people 55 and older – these debit card overdrafts are both extremely costly and easy to prevent if the banks were interested in discouraging them.  On the contrary, bank practices intentionally maximize overdrafts by automatically approving these debit purchases and changing the order they subtract transactions in their daily account balancing, debiting the highest dollar amount first and artificially increasing the number of $34 fees they can charge.

8.Home foreclosures hit communities of color the hardest. An estimated 17% of Latino homeowners, 11% of African-American homeowners, and 7% of white homeowners have lost their homes to foreclosure or are now at imminent risk.

Sources: 

1. Center for Responsible Lending, http://www.responsiblelending.org/payday-lending/

2. Center for Responsible Lending, “Predatory payday lending practices cost American families $4.2 billion annually,” www.responsiblelending.org/issues/payday; Center for Responsible Lending, “North Carolina consumers don't miss payday lending,”

3. Center for Responsible Lending, “North Carolina consumers don’t miss payday lending,”  http://www.responsiblelending.org/media-center/press-releases/archives/north-carolina-consumers-don-t-miss-payday-lending.html; NC Council of Churches, “The Raleigh Report”, http://www.nccouncilofchurches.org/2011/05/raleigh-report-may-20-2011/

4. Center for Responsible Leading, “Unfair Bank Practices Threaten to shred the safety net of Social Security for Older Americans,” http://www.responsiblelending.org/overdraft-loans/research-analysis/shredded-security.html

5. Center for Responsible Lending, http://www.responsiblelending.org/overdraft-loans/tools-resources/some-banks-are-denying-debit.html

6. Center for Responsible Lending, http://www.responsiblelending.org/overdraft-loans/

7. Center for Responsible Leading, “Unfair Bank Practices Threaten to shred the safety net of Social Security for Older Americans,” http://www.responsiblelending.org/overdraft-loans/research-analysis/shredded-security.html

8. Center for Responsible Lending, “Demographics of a Crisis,” http://www.responsiblelending.org/mortgage-lending/research-analysis/foreclosures-by-race-and-ethnicity.pdf pg. 3.