Short-Term Loans May Represent Better Value than Overdrafts and Have Clearer Terms than Credit Cards, Says New Research
PaydayLoansOnline.net reveals that short-term loans often make cheaper forms of borrowing that recourse through bank overdrafts.
ATLANTA, Sept. 6, 2012 /PRNewswire/ -- New research supports this view and suggests that 30-day-and-under lending is routinely accompanied by terms that are easier to understand than credit card agreements.
When compared to bank overdrafts, short-term loans are usually awarded in conjunction with transparent, easy to follow terms according to research released by a government study. The FDIC Study of Bank Overdraft Programs revealed that a high percentage of banks were found to deliberately increase the occurrence of customers running into overdrafts without complete knowledge of their bank balances.
The measures taken by banks included displaying account information on Automated Teller Machines (ATMs) after funds have been drawn that take the customer into negative balance, and increasing the likelihood of a customer's account falling into insufficient funds by clearing larger checks before smaller ones paid out by a customer at the same time. Furthermore, the FDIC study found that some banks were automatically subscribing customers to overdraft protection insurance without informing them.
These unfair banking practices are in stark contrast to the conduct of many payday lenders whom are required to clearly display all fees and APR before the point of contract. This applies to online lenders too, such as those that can be aggregated for free through comparison services such as http://www.paydayloansonline.net/.
The scenario with credit cards and the contents of their agreements questions how much consumers understand. One of the major credit card bureaus, Equifax, recently released figures indicating that the rate of newly issued credit cards rose by 37% between February 2011 and February 2012. Of this high number of new credit card owners, it seems that many may not be aware of the credit terms to which they gave consent. This makes for worrying reading when compared to the results of the 2012 US Literacy Survey. Upon being asked to give themselves a grade commensurate to their financial comprehension, 42% of respondents gave themselves "D" or below.
On the whole, customers deciding to take out a payday loan understand much better the product and the consequences of their choices. A George Washington University study in 2009 demonstrated that payday borrowers make informed choices. The survey showed that 50% of the 1,173 borrowers surveyed had researched other credit alternatives prior to undertaking a payday loan, deciding that this method suited them best. The study pointed to over 80% of these borrowers having insufficient bank funds to meet their expenses and avoided high checking account overdraft feeds by opting to borrow from a payday lender.
A spokesperson for PaydayLoansOnline.net responded to these research findings with reference to the loan comparison service available on the website.
"PaydayLoansOnline.net works with a network of regulated lenders whom all provide full details of their finance options before a customer enters into any form of contractual agreement with them. The terms are clear, transparent and easy to follow with all customers knowing where their stand from the get-go regarding interest and repayment plans."
To learn more, go to: http://www.paydayloansonline.net/short-term-loans/
Contact:
Sam Ehscknazi
PaydayLoansOnline.net
Tel: 678-66653
SOURCE PaydayLoansOnline.net
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