Out here in San Franciso, CA; six credit unions parthered with the city will take on payday lenders.
If you have about 40 minutes of your time, please watch and listen the video on the following link below:
http://www.newamerica.net/events/2009/springing_the_debt_trap

Not only did you provide a truly oversimplified solution to something that is actually complicated in nature, you positioned yourself from the vantage of being intellectually superior to anyone who has ever “fallen” for the trap.

I can agree with your main premise that spending an extra hundred a month for payday loans that in theory could be going into a savings account. But, in practice life is often more complicated.
It appears to me that you are lumping too many people across a broad range of socioeconomic status into the same category: obviously stupid.

So, the best advice for those of us you think are obviously too stupid to not pay attention to the extortionist rates of a payday loan company is to put our money in a bank account and check our credit report? COME ON NOW! REALLY? I think you missed the fundamental purpose of a loan. The borrower lacks said funds to cover an expense. Therefore, he can’t just put his future money in the bank and tell whatever pressing financial burden du jour to wait. He needs money now. Tell that minimum wage earner that his daughter doesn’t need to eat three times a day or the young mother who’s infant is chronically sick to not pay her after-insurance medical bills or that young professional with a significant student loan burden to just hold off on fixing her car.

The solution to the problem is good credit, but the irony of the situation is that the very banks whom you would curry favor with through good credit are the very same institutions seeding money to the paycheck lending industry. Look it up, the biggest ones are publicly traded. Who owns most of their stock? Wait for it……other traditional banks.

Sure people are frustrated with traditional banks (I happen to be one of them). But dealing with that frustration doesn’t mean you should just throw even more of your money away to another scammy company (read: payday lenders).

First off, an average is 1 number, not a range. Second, I expect your demographic information to be skewed (probably using each person who has applies for at least 1 payday loan rather than weighing people who rotate them).

Comparing yourselves to overdraft protection is ludicrous. Overdraft protection is already a horrible rip-off and is being addressed by legislation. How about we take a look at payday loans vs. credit cards (because after all, everyone knows credit cards charge nasty rates).

Credit cards can charge up to 35% APR, pretty high. Payday lenders charge anywhere from a low of 400% to a high of 800%, that’s robbery.

Using payday loans is not an educated choice whatsoever. Your companies push your “services” with massive marketing campaigns that overwhelm any sense of what their best options are. You deliberately attempt to hide the alternatives, which are far better, and come spouting your fake “statistics” and other marketing bullshit so you can continue tricking people into your fee laden theft rings.

Let me address each of the points you made in your response – both the ones I agree with and the ones I disagree with.

Let me concede this point right off the bat. Payday lenders like Check ‘n Go serve a very real market segment that exists today. There are consumers out there that are frustrated with the current banking system and see “alternate financial services” as a better option. For those that feel this way and are willing to pay the fees associated with payday loans and cash advances, Check ‘n Go has every right to serve and build a business model around these customers.

But I will not concede that this is the “best” way to manage your finances.

Re: the “average” customer…While I have no doubt that Check ‘n Go’s customers represent virtually all demographics, studies show that the primary sources of business for payday lenders are lower income minorities (including the FDIC report I cite). Many of them are young, less educated and as you suggest simply living from paycheck to paycheck.

Re: payday loan fees vs. bank overdraft/ATM fees…Just because a bank will charge a fee for certain behavior doesn’t mean that the consumer has to put themselves in the position of having to pay them. What ever happened to not spending more than what you have? How about not overdrafting the account in the first place? Yes, banks do charge exorbitant fees for certain transactions but consumers can be smart too. My bank has a branch just a short distance from my house. I use the ATM there and never pay a fee. There are ways to make it work.

My bank charges $39 for an overdraft. Using the example from the article, if I were to borrow $200 at 25% for two weeks (which is the rate for my state – Wisconsin), I’m paying $50 in fees. That’s more expensive than an overdraft and if I’m using this money to pay for auto repairs, medical bills, or housing as you suggest, $200 isn’t going to get me very far and I’ll likely be paying even more for a larger line of credit.

While many Check ‘n Go customers may feel disenfranchised by traditional banks, I can’t believe that regularly using payday lenders makes more financial sense than opening a low minimum free checking account at a bank and NOT overdrafting it. As I suggested, use the money you would have spent in payday loan fees and put it in a savings account and suddenly you have a cushion to fall back on in case some of those unexpected expenses arise.

I disagree with your assessment of my judgement as “condescending”. I would agree that many people have a much more difficult time making ends meet than I do but my goal is to advocate for the best ways for these individuals to improve their financial situation and I can’t in good conscience advocate for consumers spending such large amounts of money in fees when they can be avoided.