June 3, 200817 yr Thanks Randy, I was planning to stop in and raise my voice a bit! Maybe I'll try to be nice and polite!
June 3, 200817 yr Watch out for gas stations. When you charge gas. They don't charge the full amount just $1 so they know your card is active. Then for some reason it takes a week or 2 to fully charge your credit or debit card.
June 4, 200817 yr This just happened to my youngest daughter. Talk about overly high fees, but this is considered legal! She thought she had $50 in her checking account, but only had $40. After the fact, we went thru her numbers, and confirmed where she made the $10 subtraction mistake. Knowing payday was Friday, she proceeded to use her debit card for 6 small purchases over a 2 day period that totaled only ~ $12. Then, she purchased gas for $35. Its hard to show the order of purchases, but on her online statement, all the small charges came in first. Online, it doesn't appear that she actually was overdrawn until the gas purchase, but since they all came in on the same day, Key bank was able to charge her $38 for each overdrawn purchase, plus some associated fees totalling another $60 for a grand total of $300+ for her $8 overdraft!!!! She of course can chalk it up to another lesson learned. I on the other hand, get to stew about it. Let's do something about these type of fees. I've always believed this to be a racket for banks, where they purposely process the large items first, and the little ones later, and thereby racking up the overdraft fees like no other.
June 4, 200817 yr Watch out for gas stations. When you charge gas. They don't charge the full amount just $1 so they know your card is active. Then for some reason it takes a week or 2 to fully charge your credit or debit card. Most stations pre-authorize your card for $1. As gas prices are going higher, some stations are using larger amounts. There was something on the news about how one guy got screwed because the station pre-authorized his card for something like $50 (even though he ended up getting less gas than that), and the hold on his card caused lots of overdrafts. The news' advice was to never use debit cards to pay at the pump.
June 4, 200817 yr I've always believed this to be a racket for banks, where they purposely process the large items first, and the little ones later, and thereby racking up the overdraft fees like no other. The banks defend it by saying that the largest-amount items are probably the most important ones (i.e., rent) and customers would rather have the smaller, less important items bounce.
June 5, 200817 yr Payday industry launches referendum to overturn Ohio law http://cincinnati.bizjournals.com/cincinnati/stories/2008/06/02/daily46.html
June 11, 200817 yr People really use these things? In 2008, I'm feel so out of touch. Not only are people using them frequently but I have heard of some people who get an advance at one place and pay it back with an advance from another place the following week! They are floating money between different pay day lenders like an official rob Peter to pay Paul system. I know of several people who will try to argue the benefit of using this system over having a regular bank account. Granted bank fees can be ridiculous but where is the individual responsibility? You know its bad when people are known to the pay day lender employees on a first name basis - yes, I know at least 2 people who fit this description. It's a vicious cycle that keeps many people from ever taking responsibility as long as they can go to a different lender and still get a loan when they need one even they have one outstanding somewhere else.
June 22, 200816 yr For Ohio's payday lenders, it's time to look at options Companies seeking licenses for other short-term loans http://cincinnati.bizjournals.com/cincinnati/stories/2008/06/23/story17.html
July 9, 200816 yr Judge rejects payday lenders' restraining order http://cincinnati.bizjournals.com/cincinnati/stories/2008/07/07/daily25.html
July 10, 200816 yr 6000 jobs is alot of jobs to lose. Maybe they could have meet half way with the companies? But i don't like the part where you're only allowed 4 small loans within a short period. Does that include small loans from the banks too? I agree, there are a lot of jobs in Ohio associated with this industry. Plus, these lenders provide a last resort for people who cannot or choose not to use banks. I am not saying that the the fees are small for these transactions but let the individual decide for themselves if it is worth paying. It appears that most of the people who rally against these services have never used one or even bothered to learn much about the industry.
July 10, 200816 yr I wonder what percentage of the 6000 jobs are living-wage jobs. or people with second jobs, or people on the state medicaid rolls.....
August 12, 200816 yr Foes question payday lending tactics http://news.cincinnati.com/apps/pbcs.dll/article?AID=/20080812/NEWS01/308120033/1168/NEWS
August 12, 200816 yr my favorite one is the one with the farmer that needs $100 (for $115) to fix his truck... it is after all his choice. :roll: I'd love to see the percentage of pay day loan stores in rural ohio and the amount of farmers that need a loan to fix their truck vs the amount of stores in urban, poverty stricken areas with "customers" trapped in the cycle of debt.
August 12, 200816 yr my favorite one is the one with the farmer that needs $100 (for $115) to fix his truck... it is after all his choice. :roll: I'd love to see the percentage of pay day loan stores in rural ohio and the amount of farmers that need a loan to fix their truck vs the amount of stores in urban, poverty stricken areas with "customers" trapped in the cycle of debt. I thought the same thing. It would take a lot of work, but I imagined an analysis of Payday Loan Places per capita in urban, suburban and rural areas or something.
August 12, 200816 yr ^Don't kid yourself, the payday loan stores are alive and well in rural, poverty stricken areas. In my hometown of 11,000 people there are FIVE of the d@mned things. clevelandskyscrapers.com Cleveland Skyscrapers on Instagram
August 13, 200816 yr That farmer ad is crap. Farmers are very good with their money and don't overextend themselves.
August 13, 200816 yr Shelter residents say they accepted $1 to sign petition By Jon Craig • [email protected] • August 13, 2008 COLUMBUS - Residents of a Butler County homeless shelter said they were paid $1 apiece this summer to sign a petition seeking to repeal a new state law regulating payday lenders. If true, people who paid for their signatures can be charged with a fifth-degree felony under Ohio law, punishable by a fine of $2,500 and up to 12 months in prison for each instance. But proving and prosecuting such offenses is rare - no one could recall a case in recent history. See link for rest http://news.cincinnati.com/apps/pbcs.dll/article?AID=/20080813/NEWS01/808130309/1168/NEWS
August 14, 200816 yr Whatever you may think of payday lenders, strip clubs, etc., these regulations are making Ohio look like anti-business kryptonite out there in the rest of America.
September 23, 200816 yr C.O.A.S.T. favors repeal of payday lender law http://cincinnati.bizjournals.com/cincinnati/stories/2008/09/22/daily22.html The Coalition Opposed to Additional Spending & Taxes (C.O.A.S.T.) on Tuesday said it will urge a "no" vote for Issue 5 on the November ballot. Voting no would repeal the recently passed Ohio law regulating payday lenders. Jason Gloyd, chairman of the Cincinnati-based anti-tax group, said at a news conference that the law contains “Orwellian” provisions, such as the establishment of a database of loan transactions with personal information; the limiting of payday loans to four per person per year; and an education program for anyone who takes out a second loan within 90 days. “Let us make our own decisions and stop interfering with our lives,” Gloyd said in a statement released after the news conference. “Most importantly, stop tracking our behavior – and stop trying to modify it.”
October 19, 200816 yr Issue 5: Does law mean end for payday lenders? http://news.cincinnati.com/article/20081019/NEWS0106/810190376 Just as the economy appears headed into recession, Ohio voters in November will decide whether to free payday lenders to charge rates curtailed this summer by the legislature. Specifically, Issue 5 is about whether to keep Ohio's new interest rate cap on payday lending or to repeal the law. A "yes" vote affirms the new restrictions; a "no" vote kills the new lower rates.
October 19, 200816 yr Monique Gentry, 43, of downtown, took out her first payday loan this month at the Payroll Advance on Seventh and Main streets downtown when she found herself in a sudden bind. If these types of institutions shut down, she said, "a lot of people would be in financial shortage." Whatever happened to saving money away for a rainy day? George Austin, 61, of Kenwood, likes the option of getting money early when he needs it. Recently, he took out a loan to help pay for a computer he was buying for his niece as a graduation gift. There was only one model left in stock so he couldn't wait for the next paycheck to come in. Whatever happened to shopping around for a deal or model?
November 6, 200816 yr It didn't take long for this news... Cash America shutting down 43 Ohio payday shops http://cincinnati.bizjournals.com/cincinnati/stories/2008/11/03/daily43.html Pawn shop operator and short-term lender Cash America International Inc. said that Tuesday’s passage of state Issue 5 has prompted the company to plan for a shutdown of about a third of its payday lending shops in Ohio. The Fort Worth, Texas-based company on Wednesday said it will close 43 Cashland shops in the coming months. The decision comes a day after 64 percent of Ohio voters cast their ballots in favor of Issue 5, which supports a law that caps interest rates payday lenders can charge customers on short-term loans at 28 percent a year.
November 6, 200816 yr Hypothetically speaking, would you guys favor a federal short term loan program similar to these places? Basically publicize this business model that we know charges such high interest that it's exploitative? I think I would actually support that.
November 6, 200816 yr That's too bad - I voted against this legislation because for every moron who lives outsides his means and has to use these kinds of stores, there is someone who, despite living on a buget and being very careful with her finanaces, simply cannot wait two weeks for the next check to come in. Not everyone can afford to save for a rainy day. Sometimes it hit all just hits the fan at once
November 6, 200816 yr Especially unfair when banks are allowed to continue charging excessive fees for overdrafts.
November 6, 200816 yr Also, I haven't seen anyone mention rent-to-own stores. Consider the fact that these businesses sell electronics, appliances, and furniture almost exclusively to people with bad credit, as these stores may be the only place they can purchases these items without a credit card, etc. Since those purchases aren't technically loans, they aren't regulated. But we calculated it out in one of my business finance classes, and many of the purchases are equivalent to paying 900% interest! That's far worse than what payday loan places are charging.
November 6, 200816 yr Those rent to own stores are HORRIBLE. I agree, something should be done about them. The only time I've ever used the check cashing places was when I worked for a company that paid you for work you did over the weekend at the end of the weekend on sunday night - if you didn't take your check right to a cashing place and cash it right then, you might not get your money because they didn't have enough $ to pay everyone.
November 6, 200816 yr Especially unfair when banks are allowed to continue charging excessive fees for overdrafts. You are complaining about a $20 overdraft fee by a bank versus a 320% interest rate charged by a payday lender? I'll write what a co-worker, who just quit his former job at a payday lender (IT support) before the shit hit the fan, said: "Payday lenders were once great companies to work for, and to do business with. They once charged 25% interest rates, nothing out of the ordinary. They were legitimate. (Redacted company), who I once worked for, was founded here in this city by an individual who personally is a great guy but has let his profits get the best of his character. After hiring a CFO who made a push to go public, we jacked up the interest rates to 50%. 120%. 200%. And on. And people still kept coming in. They wanted their money, and they wanted it now despite the escalating penalties. We stopped caring about helping people in their time of need, and we began looking at solely at our profit margins. How much we could squeeze out of the customers -- who were mostly poor, disadvantaged and a minority."
November 6, 200816 yr People will be forced to write bad checks and pay the overcharge You are complaining about a $20 overdraft fee by a bank versus a 320% interest rate charged by a payday lender? Seicer, do the math. The 320% is an APR if the initial charge was not paid on time and extended for a full year. The were not paying back 320%. That's why people are uninformed about this law. The $20 would be as much if not more when you are talking about in original $1.00 debit card expense! That's the problem with the law, people were only being charged $15 per $100 borrowed. I don't think that is too much if you need $100 badly.
November 6, 200816 yr Payday lender Cashland announces Ohio closings in response to vote Posted by mneff November 06, 2008 08:15AM COLUMBUS -- At least one payday lender is moving quickly to scale back its Ohio operations after Tuesday's vote capping interest rates on the short-term loans. The operator of Cashland stores says it will close about a third of its Ohio locations over the next few months.
November 6, 200816 yr I think that there will be more banks getting into the check-cashing business - KeyBank (along with a few others) offers the check-cashing services minus the exorbitant interest rates through their KeyBank Plus program. I wonder if they contributed to the Issue 5 campaign. Along with that, they offer financial literacy programs through designated centers located in low-to-moderate income areas. There's obviously a market for these services, and I'm guessing banks will try to get their take: https://www.key.com/html/keybank-plus.html https://www.key.com/html/fe_education_centers.html clevelandskyscrapers.com Cleveland Skyscrapers on Instagram
November 6, 200816 yr If you know how to loan shark and pawn broker then this should be a growth time in Ohio. There are reasons for the bottom end of the financial services industry to exist and they do have to charge high fees and interest rates since so many of their clients will not pay them back or return the goods. The problem is that these companies become predatory rather than simply available in a crisis moment.
November 6, 200816 yr Overdraft fees have increased a lot recently. Charging $15 for borrowing $100 over a couple weeks, with penalties to boot, is filthy mafia behavior. It's a regressive poverty tax, because if someone who's not in dire straits needs to borrow $100 they can get it almost interest free. It used to be categorically illegal nationwide to charge high interest rates no matter how low the lender's opinion of the borrower might be. Many religious texts forbid it, including Leviticus-- it's one man taking undue advantage of another's misfortune. But usury laws have declined as corporate lobbying has grown. If these guys can't be profitable charging 28% APR they need to find another line of work.
November 6, 200816 yr Seicer, do the math. The 320% is an APR if the initial charge was not paid on time and extended for a full year. The were not paying back 320%. That's why people are uninformed about this law. The same is said for a 20% or 25% APR. I'm quite informed of what was just passed, and given the overwhelming support for the passage of the regulations, so were others. They are in the business of making excess profits, period.
November 6, 200816 yr This issue falls into the category or forced responsibility. It fits right in there with the smoking ban and seat belts. This doesn't seem like the American way. People should have the right to chose whether or not they smoke, whether or not they wear their seat belts and whether or not they want to get an advance on their paycheck at whatever interest rate it is. I believe in the free market and I believe in capitalism. If there is a market for these payday loans then they should exist. The interest rate is based on demand. If one payday lender's interest rate is too high then go somewhere with a lower interest rate! This competition SHOULD keep interest rates fare. I believe it is the job of the people to keep businesses honest through exercising our right to choose a lender. What happened here? How did we go from 25% to 320%?
November 6, 200816 yr The same is said for a 20% or 25% APR. I'm quite informed of what was just passed, and given the overwhelming support for the passage of the regulations, so were others. No, its clear by your post that you don't get it. Period.
November 6, 200816 yr Seicer, do the math. The 320% is an APR if the initial charge was not paid on time and extended for a full year. The were not paying back 320%. That's why people are uninformed about this law. The same is said for a 20% or 25% APR. I'm quite informed of what was just passed, and given the overwhelming support for the passage of the regulations, so were others. They are in the business of making excess profits, period. When did this become a bad thing in the United States of America?!?!?! What country am I in? This country is based on capitalism and freedom. These businesses are obligated by law to do what is best for their stock holders... which is make money! If the market exists for such high interest loans then they will serve it! I can't believe that we are beginning to punish companies for making TOO MUCH MONEY!!! We want a special tax on the oil companies because they are making record profits... are you kidding me? They are going to meet their margins no matter what... any tax on the oil companies is the same as an increase in the gas tax because prices would go up... but that's for another thread.
November 6, 200816 yr How is this a country based solely on "capitalism"? When we dole out hundreds of billions of dollars to banks to keep afloat? When we prop up our "big three" with lavish loans and monies (1980s, which could repeat soon)? When we give tax breaks to oil companies and they return with record profit margins? Of course, have you ever looked at the disproportionate customer base that the payday lenders operate in?
November 6, 200816 yr Competition my eye. Why didn't this free-market-magic reduction of payday loan rates already happen on its own? If they all refuse to charge lower rates, and the need for money still exists, the "invisible hand" will just give them a thumbs up. Pure capitalism was completely discredited long ago, around the turn of the (last) century. Nobody practices it anymore. Its founding thinkers--Adam Smith et al-- never claimed it could work when a few players in the market hold most of the capital and others have none. There was an overt assumption, during the colonial times when capitalism theory really took off, that there was a virtually infinite amount of arable land in N. America free for the taking. Anyone could just claim a plot, start a farm, and become a market player. It was also assumed that small farms would forever be viable businesses (Ha!). In this way, it was believed that everyone had relatively equal access to capital. For free markets to function, equality of wealth is a must. That's why capitalism and socialism are NOT antithetical.
November 6, 200816 yr ^^I was opposed to the bailout. Like I said, the market will determine which businesses succeed and which fail. Those banks that made bad loans failed... epically. Every large corporation in this country gets tax breaks in many cases to keep them from moving elsewhere. Why do the oil companies get singled out? Because they're actually doing well? They have a product which they sell based on the market price. Who's fault is it that you have no choice but to buy that product? Place blame elsewhere if it makes you feel better, but their profit margins are right in line with most other large corporations. Back to the topic at hand... the disproportionate customer base? They go where there is a demand for their services. You are getting into a social discussion and it is true that these most borrowers are poor, but that is not of the lenders concern! They will lend the money regardless of its purpose. It is up to the borrower to be responsible and make good financial decisions.
November 6, 200816 yr Cashland in Lorain and Elyria suddenly sprouted big banners proclaiming "WE BUY GOLD" - so I guess they'll now survive on pawn, where there's no maximum interest regulation.
November 6, 200816 yr Considering the expected default rate, loaning at 28% probably would not be profitable. They'll have to be involved in other business to make money and probably strengthen their credit standards on who to make loans to. This law probably went too far and will hurt as many as it helps.
November 6, 200816 yr Back to the topic at hand... the disproportionate customer base? They go where there is a demand for their services. You are getting into a social discussion and it is true that these most borrowers are poor, but that is not of the lenders concern! They will lend the money regardless of its purpose. It is up to the borrower to be responsible and make good financial decisions. Last i checked that was the role of government. To fill the gap when the markets fail, you know, those social discussions. This was never a purely economic discussion. It's easy to turn a blind eye to the reality of pay day lending because theoretically it's not a bad concept. I don't know what the proper APR level should have been but it was clear that the old system was flawed due to the people that were being targeted and disproportionately using the service.
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