A new report from the Center for Responsible Lending finds some of the nation's largest banks, including Minnesota-based U.S. Bank and California-based Wells Fargo, continue to offer costly advance-deposit loans that can trap borrowers with triple-digit interest rates, the Washington Post reports.
The study found the payday advances -- pitched as short-term borrowing -- typically cost about $10 for every $100 borrowed. However, overdraft fees and additional interest can quickly add up if there is insufficient funds when a payment is due.
“We’re very clear that this is an expensive form of credit and not to be used as a long-term solution,” Wells Fargo spokeswoman Richele Messick told the newspaper. “We are very upfront and transparent with our customers about this service.”
Click here, to read the Center for Responsible Lending's full report.
More Minnesotans are turning to the high-interest loans. Demand has more than doubled from 170,000 in 2007 to 350,000 loans in 2011 — the highest ever reported to the Minnesota Department of Commerce.