Group says bank overdraft fees rival payday loans.

LITTLE ROCK - As co-founder of Arkansans Against Abusive Payday Lending, Hank Klein was one of the first in the state to cry foul about the industry's use of the term "fee" to describe its charges for short-term loans.
Klein is not advocating for either side in Arkansas like he did for the payday lending discussion, but when asked, the former credit union executive said he interpreted the bank policy differently from that of payday lenders.

His statement mirrors assertions by payday lending officials that they, too, charge fees, not interest, and therefore are not subject to the state's usury law.

However, the state Supreme Court has ruled that payday lenders charge interest on short-term loans, often running into triple digits when converted into an annual percentage rate, well above the state's usury limit.

One difference in the practices is that consumers seek out payday loans, said Kathleen Day, spokeswoman for the Center for Responsible Lending.

Federal lawmakers have proposed legislation that would amend the Truth in Lending Act to clarify that overdraft fees are finance charges, so that annual interest rates are reported, allowing consumers to compare the cost of overdraft charges with the cost of other options.

For more information about bank overdraft fees rival payday loans , please see on nwaonline.net