Online PR News – 14-September-2009 – Big banks have entered the fray! Wells Fargo has added cash payday loans to its list of services and the payday loan industry has taken a giant leap forward. Industry watchdogs believe this ground-breaking step will bring respectability to the payday loan industry in general.

With everyone from every level of the economy feeling the pinch of the new recession, we’re all looking for ways to save money and get ahead. Even the big banks, who have added payday loans to their list of services offered their customers. By offering this well-loved product to their checking account customers, big banks like Wells Fargo and U.S. Bancorp are hoping the popularity of the short term loans, already established on the internet with dozens of lenders and companies offering the service online, will allow them to take part in the action too.

Until recently, big banks wouldn’t even consider talking to a customer who didn’t have any collateral, bad credit, or no credit at all. These people were essentially locked out of the traditional personal loan market until payday loans came along.

Payday loans are often taken out by people who need emergency cash right away, and have no other alternative for borrowing. They have no credit and nothing to put down, and the big banks turned them away every time. Although payday loan carries a higher interest rate than a traditional loan, it offers many things a traditional loan cannot. One thing is speed. An online payday loan for up to $1500 can be procured in less than one business day at most online websites that offer payday loans. Not so for a personal loan from a bank. A borrower can get approved for a payday loan with nothing down, and no credit or even bad credit. Not so for a traditional loan from a big bank.

With so many Americans locked out of the loan market, and no end in sight for the demand for quick and easy loans, since cash emergencies pop up for everyone, and at any time, the payday loan industry has grown by leaps and bounds in the past ten years. The demand has been proven.

With proven strong demand for short term loans to high-risk customers, big banks have finally decided to join the market and start offering them to their customers. This is good news for payday loan customers in general, even if they are not Wells Fargo or U.S. Bancorp customers. More players means more competition, and better service for borrowers. As more big banks start offering payday loans, respectability will increase and soon potential borrowers will have even more choices when it comes to getting fast emergency cash before their next payday. Everybody wins!

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By Andrew Housser

Every week, many thousands of Americans take out payday loans — short-term loans that borrowers must pay back when they receive their paycheck. Payday loan shops are big business. But they also can cost uninformed consumers a bundle.

When many people get into a financial bind, they go to a local payday loan establishment and borrow a few hundred dollars. They plan to repay the loan in a week or two, when they’ve got the money. But they pay a huge price. Payday loans can become a dangerous addiction that can cost hundreds or thousands of dollars a year.

Clearly, payday lending is big business in America. Today, there are 22,000 payday advance stores nationwide, lending more than $40 billion in short-term credit (according to the Community Financial Services Association). The typical interest fee on a loan is $15 on a $100 advance, and most loans must be repaid within two weeks.

While payday loans may make economic sense for some people in a few limited instances — such as using them to avoid a substantial late fee or bounced-check fee, or keeping your electricity from being turned off — they can become dependencies that will cost you dearly. To avoid payday loans, use these techniques:

1. Understand the true cost of payday loans

Payday loans can have an annual interest rate of 400 percent. A recent study pointed out what that could mean, in real terms. Over three months, a $300 credit card loan at 16 percent interest would cost $15. A payday loan would cost $270. It is not a good idea to rack up credit card charges that you cannot pay off entirely each month, but that example shows just how costly payday loans can be relative to other forms of credit.

2. Plan your spending

Create a budget that accounts for all income and expenses. Plan funds for every category, and discipline yourself not to spend more. Be sure to devote some amount — even if only a few dollars a week — to saving for unexpected costs.

3. Create an emergency fund

Set aside money you will not touch except in an emergency. Jump-start your fund by brown-bagging lunch, avoiding extras like coffee or CDs, holding a yard sale, or taking on a second job. Put the proceeds in a simple savings account that you will not accidentally empty. It is not a good idea to keep a lot of cash around the house, but if you must keep funds in cash, hide the money well — even from yourself.

4. Avoid payday loan rollovers

The payday loan process can quickly get complicated. Many people “roll over” their loans, borrowing the loan again, rather than repaying it. The Federal Trade Commission has pointed out that the cost of three rollovers on a $100 loan could total $60. Over time, some people wind up giving more than half their incomes to payday lenders.

5. Check into overdraft protection

Many banks offer overdraft protection service that, for a small fee, allows you to clear a check or debit when you don’t have enough funds in your account. It is not ideal, but the cost is much lower than a payday loan.

6. Borrow from a friend or relative

If you just need a few dollars to tide you over, ask for an IOU. However, an unpaid loan can destroy relationships, so don’t use this option unless you know you can pay it back — and borrow only on a rare occasion. Put the agreement in writing, including moderate interest you will pay or a favor you will do in return.

7. Talk to the creditor

If you owe a medical bill, for instance, ask your doctor about making payment arrangements. Most medical providers will work with you to pay the bill in a way you can afford.

8. Get help

If your bills are typically more than you can pay, look into all the options. If necessary, check with a reputable debt settlement firm to help find a way to get your debt under control.

If you find yourself in a tight financial spot, don’t make the problem even more stressful with burdensome interest rates and ongoing debt. With careful planning, you can avoid the payday lender — and find financial freedom.

Source: Rockford Channel 13

The City Council also will be asked Tuesday to support legislation that would reform “payday loans.”

Payday loans are cash advances for up to $500, secured by a personal check from the borrower.

The loans often carry significant fees and interest rates, and are exempt from state law limits on the amount of interest that may be charged.

The city last year called for legislation that would limit to 45 percent the annual interest rates and other fees that payday loan companies can charge.

Carl Castillo, the city’s policy advisor, said that idea was met with a “significant amount of resistance.”

This year, Castillo said, the new approach will be to ask for limits on how many times a payday loan can be rolled over.

“The city supports legislation to prohibit lenders from making consecutive, repeated payday loans to consumers,” according to the plan. “More restrictive regulation of these companies will lower the risk to low income individuals and families of becoming trapped in the cycle of poverty.”

The City Council is expected to approve its legislative goals later this month, and present them to area lawmakers during a breakfast in October.

The council would then revisit its goals in February next year, as lawmakers begin drafting specific bills.

By Patrick McEwen
Monday, September 7, 2009 8:00 p.m.

In 1995, the Wisconsin state Legislature repealed their restriction capping at 18 percent permissible interest rates in Wisconsin. This act essentially legalized the “payday loan industry.” Here’s how it works: People can get short-term loans from employers, often only for days or weeks, at exorbitant interest rates well above 100 percent when calculated on an annual percentage basis.

State Rep. Gordon Hintz, D-Oshkosh, is now pushing legislation that would recap Wisconsin interest rates at 36 percent. The new rate cap would be higher than the last, but still low enough to functionally eliminate the payday loan industry.

The motivations behind Hintz’s bill are self-explanatory. Proponents want to prevent predatory lending practices that take advantage of unwary consumers. It’s not hard to discern the primary recipients of payday loans: the working poor. The wealthier, oppositely, either have enough savings to cushion themselves from unforeseen expenses or are able to access alternative forms of credit like credit cards or traditional bank loans. Certainly noone in the top income brackets need take refuge in a payday loan. The working poor, for a myriad of reasons — credit history or lack of steady income, notably — are simply unprofitable as borrowers, regardless of interest rate.

Other than reeking of “government knows best” nanny-statism, the proposed legislation has a couple of issues. There are basically two scenarios that could unfold should this legislation pass. Capping permissible interest rates will either provoke some tax break or other incentive for banks to continue to provide short-term loans at rates below the 36 percent cap. Or it won’t. Each scenario has its flaws and needs to be addressed separately.

Without any short term loan incentives, Hintz’s legislation would essentially make it illegal to give short-term loans to anyone whose financial situation, even given interest rates below 36 percent, makes them likelier to default on a loan. The payday loan industry would be eliminated. This would leave these working poor with no choice besides looking elsewhere to find money for unexpected expenses, such as repairing a car that just broke down. It is not hard to imagine such individuals bouncing a check, borrowing from friends or family or — much worse — turning to illegal black market lenders.

Under this hypothetical situation, the only way Hintz’s legislation makes sense is if we assume payday loans to be the worst of the aforementioned “crisis” options — or more sinisterly, if we assume the working poor aren’t capable of discerning their appropriate financial options. Despite the high costs of payday loans, nobody in the state Legislature is qualified to make that judgment about the working poor. Various policy wonks might be able to prove overdraft costs are lower at some banks, but they cannot assess the financial burden of borrowing money from that crazy uncle nobody likes to deal with. And they are not qualified to assess the impact on someone’s personal life of not being able to get their car fixed in time to be able to get their work and keep their job. For some, the payday loan industry really is a lifeline, however imperfect. And compared with the other lifelines which might emerge in its place, I’d favor the payday loan industry in a heartbeat.

The second possible consequence of Hintz’s legislation would involve coupling the interest rate cap with tax incentives or subsidies to lenders, enabling them to continue providing short-term loans at legal rates to those in sudden financial trouble. While this solves the problem of illicit or even more-problematic financial recourses, it brings about an entirely new set of issues.

Forget for the moment about the interest rate cap and just consider the idea of our government subsidizing loans to the working poor. Do you see a problem here? If there is one universal principle of economics, it’s that whenever you offer money to enable something, more people will always emerge to do that “something.” In this case, giving banks incentives to make payday loans will ensure heavily-increased demand for such loans by the working poor — who will realize, not illogically, that less costly interest rates make payday loans more lucrative for them.

If the goal of Hintz’s legislation is to stop unwary consumers from taking out loans on which they’re sure to default, then providing incentives for people to go into debt in the first place would be incredibly counterproductive. Those who don’t see the inherent flaws in a plan to encourage people to take on unnecessary debt really have not learned anything from the economy of the last two years. Does the term “sub-prime mortgage” sound familiar to anyone?

Better features, more speed, sexier style — upgrading your personal electronics just doesn’t have a downside. Or does it? What do you do with your old cell phone, laptop or PC monitor once you’ve chosen a newer, snazzier version?

You know you can’t just throw these items in the trash since many contain potentially harmful chemicals and elements. And you may also fear that simply trashing your old PC or cell phone could put sensitive information – like your checking account number or contacts from your address book – at risk of falling into the wrong hands.

Often, set-aside personal electronics wind up cluttering a drawer or closet because we simply don’t know what else to do with them.

Recycling is a better option than trashing or hoarding, and Americans have embraced the concept in nearly every other aspect of their lives. However, if you’re unsure how to safely, cost-effectively recycle your personal electronics, consider these tips:

* From charities to recycling companies, it’s easy to find someone to take your used electronics. Before you hand over your old cell, laptop or even MP3 player, be sure to ask what the recipient will do with the item.

“While it’s wise to remove your personal information yourself before you turn in your used cell phone, PC or laptop, a reputable recycler will also ensure all information and programs are removed from an item before they do anything else with it,” says Thomas Muhs, president and chief manager of Engaged Recycling, which operates the electronics recycling Web site MyBoneYard.com. The site has recycled more than 7,000 electronic items, including 4,300 cell phones, in the past year.

For example, MyBoneYard.com wipes all stored memory from the items it receives. The site then prepares the items for resale to those who can’t afford to buy new, or dismantles the items to the base materials for proper recycling if the item is broken or obsolete. A tracking number allows you to follow your donation as the site processes and distributes it.

* Cell phones aren’t the only electronic items you can recycle. Virtually any personal electronic device – from your computer monitor or laptop to your MP3 player or old video game console – can be recycled. You can use MyBoneYard.com to look up the device you want to recycle and find out if there’s a use for it. If so, you may be eligible for a reward – in the form of a prepaid card or other compensation. In fact, the average compensation is about $24 per item.

* Children learn about recycling in school and in the home, and many kids are their household’s biggest recycling advocates. With more teens, tweens and younger children carrying cell phones, smart phones, iPods and other personal electronics, it’s never too early to start educating them about recycling these items. Look for online tools to help you communicate the message in a fun, kid-friendly way, like MyBoneYard’s award-winning mascot, “Scrapster.” The site’s mascot and marketing campaign recently won two awards of distinction in the 15th Annual Communicator Awards.

Kids can connect with Scrapster, the recycling hound, who sports green fur to communicate his “green” message and a yellow bone to underscore the “golden” rewards of recycling, including a positive environmental impact, personal satisfaction and – in the case of items recycled through MyBoneYard.com – possibly real dollar rewards.

To learn more about recycling your personal electronics, visit www.myboneyard.com.

Arguing “needy families in Wisconsin should not be abandoned to predatory practices most of us would find intolerable,” the Wisconsin Catholic Conference (WCC) is supporting legislative efforts to place stronger regulations on the payday loan industry.

The WCC is asking Catholics and others to support legislation such as Assembly Bill 392, which was introduced last week by over 55 co-sponsors. The proposal prohibits payday lenders from assessing finance charges that exceed 36 percent per year, and would give the Department of Financial Institutions (DFI) the authority to enforce the new regulations. Those who violate the regulations could be subject to fines, imprisonment, or both. Borrowers could also bring suit against violators to recover damages.

WCC Executive Director John Huebscher said that the Conference’s support of efforts to curb payday lending reflects the insights of Catholic groups that work directly with needy families. Catholic Charities agencies in Wisconsin, which offer family financial counseling services, are seeing an alarming rise in the number of individuals seeking their services due to the unregulated nature of the payday loan industry.

“The everyday experience of staff at Catholic Charities and that of parish-based volunteers with the Society of St. Vincent de Paul Councils offer powerful testimony that payday loans impose great hardship on families who already struggle financially,” Huebscher explained. “Their message is loud and clear. Our laws must do more to protect the poor in this area.”

Source: Blogging Blue

You may be delaying medical treatment while keeping yourself and your family afloat through the recession. But if you delay medical treatment for a problem that you feel isn’t bad enough to justify the cost and time lost from work right now, you could be doing more to sink yourself financially than anything the economy may throw at you.

One in four Americans put off necessary medical treatment because of cost, according to a Kaiser Family Foundation poll of more than 1,200 adults earlier this year. Yet health experts agree that delaying needed treatment will end up costing individuals and the country far more in the long run.

It may be tempting to put off treatment of health problems that start out minor. But many of these, like high blood pressure, hearing loss, joint pain and carpal tunnel syndrome, will escalate if untreated, putting you at risk of severe health and financial consequences. Allowing minor health problems to go untreated in order to save money now, could mean a much more serious problem and higher costs to treat it later.

Carpal tunnel syndrome (CTS) is a good example of an ailment you might think you can live with rather than pay the cost of treating it. It’s surprisingly common, with up to 5 percent of the workforce affected, according to the journal Plastic and Reconstructive Surgery. The National Center for Health Statistics reports CTS results in the most number of days lost of all work-related injuries, with nearly half of all sufferers losing 31 days or more of work.

With people spending more time on their computer or online, more people are likely to be exposed to the repetitive motions that can lead to CTS.

While severe cases may require surgical treatment, studies have shown that early treatment with splinting and massage can help alleviate this painful condition. Appropriate splinting (or bracing) helps keep the affected wrist in a neutral position, minimizing pressure on the irritated nerve, according to the Mayo Clinic.

Massage can also be effective, researchers have found. A report in the Journal of Bodywork and Movement Therapies indicates massage can reduce CTS symptoms. While only your doctor can make an actual diagnosis, once you know you have carpal tunnel syndrome there are simple, low-cost steps you can take to supplement your own treatment, including:

* Adjust your posture to minimize strain. Sit up straight and don’t rest your wrists on the edge of your keyboard tray while typing; try to maintain a straight wrist position.

* Stay hydrated. Proper hydration is essential to the healthy functioning of all our tissues.

* Ask your doctor to recommend appropriate exercises to keep the wrist flexible.

* Wear a wrist brace, even when you sleep. A special night brace is best.

While you can purchase a low-cost brace in most drugstores, a better option might be one that combines bracing and massage benefits, such as the IMAK SmartGlove. The glove delivers the benefits of two therapies proven effective in the treatment of CTS – bracing and massage. Made of washable, breathable cotton Lycra, the SmartGlove encourages proper hand and wrist position to help alleviate carpal tunnel symptoms, and an ergoBeads pad cushions your wrist and improves circulation with a massaging effect.

It makes sense to save yourself long-term pain and money by addressing the problem early. Consult your doctor if you experience wrist pain that might be carpal tunnel syndrome. To learn more about CTS relief, visit www.Imakproducts.com.

Job loss, divorce, death of a spouse, serious illness or disability – it’s hard to imagine experiencing a major life crisis. Unfortunately most of us will at some point in our lives.

A recent survey by AARP Financial Inc. found that nearly 60 percent of Americans ages 40 to 79 already have experienced an event that had a significant impact on their finances.

When it comes to saving and investing, most of us focus on happy life events like buying a house or saving for college or retirement. But the reality is that our most fateful financial decisions are usually triggered by a sudden life crisis.

“Given the unpredictable and unfortunate nature of a life crisis, these are times when we may be distracted, overwrought or vulnerable,” says Richard “Mac” Hisey, president of AARP Financial. “As a result, many of us make poor decisions – or take no action at all – possibly putting our financial security at risk.”

Many of us feel anxious when dealing with money matters. But life crises can trigger additional emotional factors such as denial, anger or regret that can make financial decisions even more difficult. Hisey notes that “life crises are the perfect storms of personal finance, where the need for important and often urgent financial decisions meets an emotional hurricane.”

The issue is particularly acute for women, who generally outlive men, and, as a result, experience more life crises and deal with the consequences longer. In addition, women are the caregivers in most families. That means they are frequently dealing with the human and logistical consequences of a life crisis, leaving little time and energy for the financial considerations.

Complicating matters is that instead of seeking out a professional financial advisor, the vast majority of us turn to family and friends for financial advice in times of life crisis. Family and friends are well-intentioned and may supply great emotional support, but they are not necessarily financially well-informed. Maybe that’s why 45 percent of people who had experienced a life crisis said it was hard to trust the financial guidance they were receiving.

On the other hand, individuals surveyed who relied on professional financial advice felt very well served. Sixty-six percent said they had a “very positive” experience with their professional financial advisor while another 24 percent said they had a “somewhat positive” experience.

“It’s clear that timely, expert professional advice often can make all the difference,” Hisey says.

If you don’t have a financial advisor or if you need a second opinion, AARP Financial offers experienced, non-commissioned and specially trained financial advisers on call to provide one-on-one guidance at (888) 602-PLAN. AARP Financial also has an online resource, Life Crisis Action Steps (www.aarpfinancial.com/lifecrises), that provides easy steps you can take before, during and in the aftermath of a life crisis to give you more confidence and a greater sense of control.

“We know it’s hard enough to contemplate some of these scenarios, let alone plan for them. But you don’t have to go it alone,” Hisey adds. “There are plenty of resources to help you better understand and manage the financial and emotional implications of a life crisis.”

Even though the economy has slowed down, college applications are up. Many people are enrolling in undergraduate programs, or going back for an advanced degree.

But, unfortunately, some people don’t consider pursuing a degree because they lack the finances. The costs can be steep. During the 2008-2009 academic year, the average annual cost of a public four-year degree was $6,585 and for a private four-year degree, $25,143, according to The College Board.

The good news is there is money out there to help you pay for tuition or room and board, you just have to find it. Here are some tips:

* Apply for every scholarship or grant you can find.
It may seem like a full-time job searching for and applying for scholarships, but the dollars do add up. And they’re free. Start your search early — many scholarships have deadlines. If you’re a high school student, begin with your high school guidance counselor for a list of local resources, and then move on to the college you plan to attend. Don’t expect large amounts — the competition will be fierce for these scholarships. But smaller awards of $1,000 or less typically have fewer applicants and are easier to obtain.

Educational Web sites are also good sources for scholarship information — but remember, the information should always be free. For example, U.S. Bank has a powerful scholarship search engine, as well as an Internet scholarship program that will begin this autumn. Over the past 13 years, U.S. Bank has awarded more than $320,000 in scholarship funding from the U.S. Bank Internet scholarship program.

* Plan to earn some extra cash.
Working and going to school at the same time is very common for today’s students. Some are earning money for tuition, while others for living expenses. You can apply for the Federal Work Study program, find a job on campus, or look for something off campus. Graduate students can look for a teaching assistant or research positions, which sometimes offer tuition discounts in addition to a salary.

* Apply for federal aid
Student loans are some of the most commonly used financial tools. Use the following steps to apply for financial aid:

1. If you filed an extension for your 2008 taxes, get them finished immediately.

2. Fill out a Free Application for Federal Student Aid (FAFSA form) and submit it as soon as possible.

3. When you receive the Student Aid Report, double check the information, and make corrections if needed. Return the report.

4. You will receive an award letter containing all the financial aid details regarding what you can receive. Consider your options carefully — look into your anticipated tuition costs, living expenses, cost of books and supplies, etc. Reply with your acceptance by the deadline. If you have questions, contact your school’s financial aid office.

* Get a supplemental loan for the rest of your expenses.
Supplemental loans are often used in addition to federal student loans when you find you still need more financing to cover the cost of your education. U.S. Bank offers a No Fee Education Loan for full-time, part-time or less than part-time students making satisfactory academic progress in an eligible four-year institution or graduate school. Students receive the full approved loan amount. This may help in handling those additional expenses such as books, laundry and food.

A few attributes of the U.S. Bank No Fee Education Loan include no fees, a low interest rate, automatic deferment on payments while in school and for six months after graduation or less than half-time enrollment. Or, choose to make interest payments while in school.

Visit www.usbank.com/studentbanking or call (800) 242-1200 to learn more.

Everyone is looking for ways to save money these days, and there are hundreds of tips for cutting costs. But make sure you are prepared to do some research and make comparisons between companies and products, otherwise you may end up spending more money than you save.

Here are some tips for saving money:

* Eliminate stamps, envelopes and checks from your life. Take advantage of the many online banking and bill-paying programs available. Keeping digital records can also help you better organize and monitor your finances, which can help you better control your spending habits.

* Comparison shop online. For example, if you’re looking for a baby car seat, type in “baby car seat” into a search engine and start looking for the best prices with the best products. Make sure you check out consumer reviews, safety articles and even blogs for information. Get your calculator out, because sometimes the special deals promoted on product sites end up costing you the same — or more — than a regularly priced item.

* Look for coupons and coupon codes. This is an invaluable tip, because there are thousands of codes available for your use when shopping online. Go to www.shopaneer.com and search for discounts, free shipping offers and buy-one-get-one-free offers by product, store, category or the item you’re interested in.

Shopaneer has more than 10,000 special deals submitted by users, stores and companies. Any expired coupons are immediately removed from the site and there is a report button if you find a coupon that doesn’t work. If you are a frequent user, you can take advantage of the new coupons tab, so you don’t miss out on any of the fabulous deals.

* Bargain for swaps or special prices. This is where the junk lying around your house can become someone else’s treasure, and vice versa. Posting your unwanted items on auction or swapping Web sites can bring in extra cash, and bidding on an item can help you get a lower price than buying it at a store. Either way, you’re saving money.

* Use the Internet for any of those minor costs that can add up over time. For example, calling directory assistance for a phone number can cost as much as $1 per use. But with a quick search on the Internet, you can find the phone number and address without any extra charges. Or if you need to buy gas, it’s cheaper to search the gas price postings online before you head out the door so you’re not overpaying or wasting gasoline trying to find the best price.