Until 2013, a small number of banking institutions had been siphoning vast amounts annually from customer records through “direct deposit advance” — items that carried average annualized interest levels as high as 300percent. Like storefront pay day loans, deposit advance ended up being marketed as a periodic bridge up to a consumer’s payday that is next. And like storefront payday advances, these bank services and products caught borrowers in long-term, debilitating financial obligation.
But banking institutions destroyed fascination with deposit advance because of 2013 regulatory guidance instructing banking institutions to evaluate borrowers’ ability to settle their loans predicated on income and costs. (more…)