North Carolina is facing a hot debate over the introduction of payday loans by Regions Bank.
Regions Financial Corp. recently introduced its Ready Advance Loan, which customers must repay within 10 days by using a bank account with direct deposit. Loaners are given a credit limit of $500.
Regions charges $1 in fees for every $10 advanced, and the money borrowed is repaid upon the next direct deposit. This new banking service has garnered many jeers from consumer advocates who claim the loan’s high interest rates could trap borrowers in a continuing cycle of debt.
North Carolina law bans payday loan shops or Internet services, however, federal law allows banks to make loans based on laws in their home state. Consumer advocate critics worry that more banks will follow in Regions’ path and are lobbying federal and state representatives to close the loophole. A variety of other groups are also advocating the restriction of payday loans throughout the state.
We will keep you updated when more information becomes available.
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