Sara Routhier, Managing Editor and Outreach Director, 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 world o...

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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. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Oct 19, 2012

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Several North Carolina lawmakers, including Attorney General Roy Cooper, are joining together in opposition of short-term loan lending within the state.

Back in 2001, North Carolina passed a law which shut down payday lending within the state causing the last payday lender to close in 2006. Unfortunately, this law did not stop the federal loophole that permits banks to offer short-term loans that are essentially the same thing as cash advances.

Regions Financial Corp has exploited this loophole through its Ready Advance program. Under the short-term loans offered through the Ready Advance program borrowers must repay their debt within 10 days via direct deposit through their bank accounts. Regions Financial Corp charges $1 in fees for every $10 lent.

Lawmakers, including Black Caucus Chairman Floyd McKissick, have written to the President and CEO of Regions Financial Corp, Grayson Hall, demanding him to end the Ready Advance lending program.

Regions Financial Corp has drawn the ire of consumer advocates that claim its short-term loans offered through the Ready Advance lending program are little more than high interest debt. North Carolina state law prohibits financing like cash advances within its borders. However, federal law allows banks, such as Regions Financial Corp, to lend such financing based upon the laws of the state in which the bank is based. Regions Financial Corp is based in Alabama, which is cash advance friendly.

“The effective interest rate on these loans drastically exceed the long-standing interest and fee limits on loans under $10,000 in our state. High-cost, short-term balloon loans like these sharply increase the financial distress of families under economic strain, and for this reason the legislature has chosen to prohibit them in our state. I therefore call upon you to stop offering these loans in North Carolina,” wrote McKissick, according to the Charlotte Post.

Cooper, along with other state attorneys general jointly call for Congress to stop bills they fear would weaken states’ ability to regulate and prohibit predatory lending, including short-term loans like cash advances, car title financing, and even prepaid credit cards.

“Payday loans trap borrowers in an endless cycle of debt, and that’s why we fought so hard to end payday lending in North Carolina. We have a long history of standing up for consumers and successfully fighting predatory loans in our state, and Congress needs to respect our decision to ban high-interest loans,” said Cooper.

Despite Regions Financial Corp arguing that they provide a service to the community, McKissick strongly voiced his belief that such programs are damaging to communities.

“Regions markets these loans as help for occasional emergency cash needs. However, families facing an income short-fall on the day the loan is made are highly likely to be short of cash at their next payday, when the loans plus fees and/or interest are due,” said McKissick.