Currently there are several US cities trying to muscle in on the lucrative payday loan craze. Some of the major players would include US bank, which has branches all across the country.
Payday loans have become more lucrative than ever because of their convenience and easy attainability. A person need not have good credit and the money is deposited directly into their checking account. Conventional banks don’t offer such convenience.
Banks competing and losing
Banks have been trying unsuccessfully to compete with payday loan stores and other check-cashing services, which typically charge very large fees. Banks hope by offering lower fees they can attract customers. The problem is that their standards are usually very stringent and it freezes out a large segment of the population.
Banks offering alternatives
Seeing as how banks are having a difficult time competing with the lucrative payday loan business they are trying to steer customers into other options. Some are advising consumers of payday loan stores to contact consumer credit counseling agencies before considering taking out a payday loan. Many consumers have already tried using such services, unsuccessfully.
What major banks are hoping for
Banks are not be able to compete with the payday loan business, so instead they try to redirect consumers to them. The goal is to offer services such as financial analysis, debt counseling services and other alternatives. Banks assume that if people are willing to pay outrageous interest rates for short-term cash, then they may be willing to use some of that money to pay for debt counseling services.
The only problem is that debt counseling services are not what some people need in a tough economy. Some people need access to quick cash, which banks have made all too clear they are not willing to give easily.