Online Extra: Payday lenders

Teresa McUsic’s April 11 column, “Watch step as payday lenders spread,” advised consumers to look at all their alternatives and understand costs and risks when considering a payday advance. We can all agree on this advice.

Payday advances are but one component of the short-term credit market. Consider this, the average fee for a $100 payday advance is $15. A $100 offshore Internet payday loan runs $25, overdraft protection averages $29, a late fee on a credit card costs $37 and a bounced check or merchant fee costs $55. The payday advance industry exists because it offers customers a service that’s more desirable than the alternatives.

Savvy consumers benefit when they’re given a variety of options. Such consumers often choose payday advances when faced with unbudgeted and unexpected expenses because they compare favorably to other short-term credit options.

— Tommy Moore, executive vice president, Community Financial Services Association, Alexandria, Va.

Comments

[Michael Schuman, New York City]

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