The beginning of the end for payday lending?

October 14th, 2010 Leave a comment Go to comments

Payday Lending ... no more

In a recent article published by the Huffington Post, I argued that the days of abusive payday lending might be numbered, now that new online services like BillFloat are appearing at a fraction of the cost.

I also lamented that some prepaid card suppliers were cozying up a bit too much to the payday lenders…
Guess what: this week, prepaid card providers NetSpend and AccountNow are finding themselves sans the iAdvance short-term lines of credit with 3 digit yearly APRs that they were tackling to some of their cards.

The Office of Thrift Supervision asked MetaBank, the originator of the iAdvance product  to stop  offering it.

It is difficult to rejoice when your industry neighbors and competitors are getting hit, because the whole industry gets blemished.
As always, market players should always improve by taking the initiative to create better and cheaper products rather than by shedding existing bad products only when forced to.

LinkedInFacebookDiggGoogle GmailShare
Categories: Best and Worst Practices, Fighting for better prices, Financial responsibility, Regulations Tags:
  • Judy Jensen

    And I-advance was shut down-these are the predators-the payday loan places.

  • Mary Jackson

    I Advance was an innovative approach to an alternative to pay day. The fees were substantially less. The 36% apr programs have not been successful for banks. The Card Act has harmed consumers and banks are putting together checking programs and higher fees so the underbanked will be further marginalized. Where is the balance between good policy/pricing and consumer protection. It doesn’t help the underbanked by calling lenders names and creating populist rhetotic without any substance.

  • http://www.plastyc.com Patrice Peyret

    The fact that “36% APR programs have not been successful for banks” is pretty sad and is the exact reason for most of the postings on this blog: banks are so inefficient and fat that they can’t operate successfully anymore below what is commonly admitted as being usury rates.
    BillFloat is much much better than payday lending:
    1- it is 1/20th of the rate of iAdvance
    2- it is exclusively for top priority items (paying bills)
    3- it does not get consumers into a spiral of debt as a BillFloat extension cannot be used to repay a BillFloat extension.

    For those interested in thorough research on the subject, read “Broke, USA”, the book by journalist Gary Rivlin (www.garyrivlin.com)


Get Adobe Flash player