Regions Bank will no longer offer a product criticized as a payday loan in North Carolina after pressure from activist groups and the state's attorney general.
Known as "Ready Advance," the product allowed customers to take out a small, short-term line of credit for a fee of $1 per $10 borrowed. A 21 percent interest rate applied on unpaid balances.
The N.C. Justice Center and Durham-based Center for Responsible Lending had been vocal in their opposition to the loans and described them as predatory "payday loans."
Payday loans are illegal in North Carolina. Regions was able to offer them here because they have an Alabama state charter, meaning they're not subject to many of this state's banking laws.
“This is a victory for all North Carolina consumers,” Jeff Shaw of the N.C. Justice Center said in a statement Wednesday. “Especially in the wake of the bad lending that led to the financial crisis, banks should understand that the last thing we need is destructive loans that drag cash-strapped families down even further.”
N.C. Attorney General Roy Cooper also said in September that he wanted to find a way to stop Regions from offering them here.
Regions told the Observer today that the bank made the decision to discontinue the product in mid-December.
"Our customers in North Carolina have given Ready Advance high ratings; however, based on a number of factors, including the small number of eligible customers in the state, we have made the business decision to stop offering the product in North Carolina," the bank said in a statement provided by a spokeswoman.
It is the only state in which Regions is discontinuing the product. The bank has defended the loans as an entry-way to credit for people without an established history or who need to improve their scores. The bank said they were not payday loans.
Regions said half of the customers had incomes above $50,000 per year and described the typical customer as similar to checking account holders but with lower savings balances.
Fewer than 200 payday loan accounts had been activated in the state since May 2011, the bank said. Customers will be notified by letter of the change.
Regions has three branches and about $236.6 million in deposits in the Charlotte area, according to FDIC data.
Wednesday, January 16, 2013
Regions Bank ending payday loans in N.C.
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2 comments:
I’ve no doubt that a large percentage of payday loan customers don’t have too much complaint – people aren’t stupid, and the costs of payday lending are common knowledge…. I expect Wonga to enter the English language any time now, in a similar way to McJob. Take the money, pay it back, moan about how much it cost, repeat.
But what does this poor excuse for ‘research’ actually tell us? The fact that customers were treated “with dignity and respect” is meaningless. How is that defined? It can mean completely different things to a customer or a regulator and I suspect the ambiguity in the question is deliberate. Of course payday lenders treat you with dignity and respect when you’re borrowing from them… that’s just basic customer service. If they didn’t, people would just use a different payday lender.
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