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You Are Here: HOME : Publications : Bridges : Winter 2007-2008 [Economic Data]
Bridges: Published Quarterly by the Community Affairs department of the Federal Reserve Bank of St. Louis

WINTER 2007-2008

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"Fringe" Lenders: Traditional Institutions Search for Alternatives

Foreclosures—Let's Talk about the Solution

Implications of the New Pricing Data form the Home Mortgage Disclosure Act

New Council To Advise Fed On Community Issues

Fed Welcomes New Staff Member

First Annual Exploring Innovation Week

Fed Calls for Research Papers

Income Tax Credit, Kids' Savings Topics of New Fed Booklets

Spanning the Region

Have You Heard

Calendar

 

A Closer Look
Included with Bridges is A Closer Look, a supplement that takes topics from previous and current issues of Bridges and examines them from the perspective of a particular area or community. This issue of A Closer Look focuses on two programs in Arkansas that help small businesses provide health insurance to their employees.

 

 

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Past Issues

“Fringe” Lenders
Traditional Institutions Search for Alternatives

 

By Lyn Haralson
Community Affairs Specialist
Federal Reserve Bank of St. Louis
Little Rock Branch

 

CHRISTUS housing

 

According to the Center for Responsible Lending, the following is a profile of the typical payday loan:

loan amount = $325

14-day Interest = $52

amount of check = $377

average borrower refinances eight times

average borrower pays $800 to borrow $325

99 percent of loans go to repeat borrowers

average annual percentage rate (APR) = 416 percent

The financial service industry has expanded beyond the traditional financial services of yesteryear. A host of nontraditional or “fringe” financial service providers have grown in popularity, adding more consumer options to the mix.

Traditional financial services are typically offered by regulated financial institutions, such as banks and credit unions, and include checking and savings accounts and home mortgage and auto loans. “Fringe” financial service providers offer check cashing and payday and title loans.

This article focuses on check cashers and payday lenders, why consumers turn to these services and how financial institutions can create partnerships to offer lower-cost alternatives. ...FULL STORY

 


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