Consumer alert!

Based on the popularity of so-called “payday loan” operations, the Federal Deposit Insurance Corp. has issued guidelines to encourage banks to start offering small-dollar loans without the enormous interest rates usually charged by the storefront payday loan outlets.

The feds make that point that since typical customers of payday loan operations usually have a checking account of some kind, they would be a market that could be tapped and probably would welcome the lower rates banks would charge for small short-term loans.

The FDIC says it would be reasonable to charge for 12 to 36 percent for such loans along with a small origination fee.

It will be interesting to see if any banks start offering such products in the months ahead. News about the FDIC guidelines may be found here as well as the guidelines themselves.

This entry was posted on Thursday, June 21st, 2007 at 12:33 pm and is filed under General info. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.