Keep in mind that payday loans don’t have a lot of fees concerning the bank during a loan, although they do have staggering fees concerning other factors; these fees arise when the lenders automatically debit payment from your back account and find that the fees are insufficient. If you read a related article in ChicagoTribune.com you’ll get the general idea.
How Payday Borrowers Get Fined
These fees typically arise when the borrower doesn’t maintain enough balance in their checking accounts when the lenders automatically debit the installment or agreed amount to be paid. Of course the lenders won’t stop at the first attempt and each attempt they make equals to additional fees fined by the bank.
Half of the payday loan borrowers don’t really see the issue here since they constantly keep track of their balance. As for the others who were not able to monitor their balances get hit by multiple bank fees and fines. Sure there are those who get fined once, but there are also those that get fined for 10 unsuccessful attempts and are charged $185 over 18 months.
This is one of the major reasons why payday loans are heavily criticized, who would want to pay these fees in addition to their loans? Not only are a lot of the borrowers fined for their bank overdrafts but their accounts can also end up getting closed.
A restriction is proposed in order to lessen these daunting fees; the Consumer Financial Protection Bureau wants to restrict the amount of times a lending company can unsuccessfully debit from the banking account of a borrower. CFPB aims to limit it to two unsuccessfully debiting of the account, for further debiting attempts then the lender must secure authorization from the payday loan borrower themselves.