Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Mar 15, 2012

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

A letter addressed to Ben Bernanke, Richard Cordray, Martin Gruenberg, and John Walsh has been written and signed by over 250 consumer advocate groups, pleading to the four influential federal regulators to put an end to the new payday loan practice being adopted by big banks.

According to the letter, Wells Fargo, US Bank, Fifth Third, Regions, and Guaranty Bank are all now offering “advance” loans, which are structured just like payday loans. The cash advances are short-term, high-cost forms of financing that the advocates claim “trap borrowers in a cycle of expensive long-term debt, causing serious financial harm to borrowers, including increased likelihood of bankruptcy, paying credit card debts and other bills late, delayed medical care, and loss of basic banking privileges because of repeated overdrafts.”

While some of the traditional lending institutions claim their advance loans are not the same as payday loans, the consumer advocates beg to differ, saying that bank advances:

  • Often carry annual percentage rates (APRs) of 365 percent
  • Are typically based on ten-day loan terms
  • On average, cause borrowers to fall into unresolved debt for 175 days per year
  • Are drawn out by some borrowers up to 30 times per year
  • Allow banks to garnish Social Security checks before the borrowers even receive that money

The letter on bank payday lending can be found on the Center for Responsible Lending’s website, and those wishing to sign the online petition may do so there as well.

The recipients of the letter consist of both seasoned financial regulators and a brand new oversight director. Bernanke is the chairman of the Federal Reserve, Cordray is the newly appointed directed of the Consumer Financial Protection Bureau (CFPB), Gruenberg is the acting director of the Federal Deposit Insurance Corporation, and Walsh is the acting comptroller of the office of the Comptroller of the Currency. The consumer advocate groups recognize that these men are vital to have on their side in the pursuit for regulating these bank-sponsored payday loans.