Receiving a Bad Rap: Payday Lenders Get All the Criticism While Bank Loans Get Off Scot-Free

Payday lenders loan money to individuals at interest rates determined by the amount and length of the loan. If a payment due date needs to be extended, then the borrower is charged additional fees. Traditional banking institutions and credit unions do the very same thing-not to mention, they selectively deny service to large segments of the population. So why are payday lenders the only ones getting so much bad press?

Payday Loans May Not Be That Expensive, After All

Across the United States, payday lenders average a $20 charge for every $100 loaned. While this may sound high at first, consider the alternatives offered by a bank. Nationally, the average insufficient check fee (when the bank clears a check even when there isn't enough money in the account, making the account balance negative)

Fees are tacked on to payday loans if they can't be paid back in time; typically, loans renew every two weeks. In contrast, if a bank account is negative for 30 days, most banks will close the account and send the account holder to a collections agency for the negative balance. Most people would welcome higher fees if the alternative was losing their checking account and having a collections charge placed on their credit report