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Author: Joke3MD One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 886574  
Subject: The antithesis of LBYM Date: 5/12/2004 9:25 AM
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Saw this article today...reminded me again why we should be happy to have discovered the Fool.

http://slate.msn.com/id/2100276/

The gist is that investors are lining up for an IPO of a company that specializes in offering "Payday Loans" at outrageous interest rates, usually to the working poor.

Many people on this board and others came from similar situations as the people described in this article, but made much better financial decisions.

Perhaps the country would be better served if such businesses weren't legitimized?
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Author: MaestroCindi Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522490 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 10:38 AM
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I wish the article went more in-depth into why people choose to use these establishments. The only reference was:

Rabenold says that one customer recently contacted the company to thank Check 'n Go for giving her a $200 advance so that she could go shopping with her friends.

Which seems like a frivolous reason to get a payday loan. Do most customers already have bad credit, and therefore don't have a credit card? Are they mishandling their budget, and therefore running out of things like food before the next payday? Is the money being used for healthcare costs where the doctor expects payment upfront? I'm not saying that these payday loan establishments aren't predatory, but what decisions did the customer make that led them to this?

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Author: ARRazorback Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522497 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 11:04 AM
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What I have always wanted to know is how these places exist when usury is outlawed?

ARR

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Author: Joke3MD One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522512 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 11:26 AM
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For more about this subject, I highly recommend David Cay Johnston's Perfectly Legal. There is an excellent chapter about the number of people who use these (and advance tax refund loans, which amount to almost the same thing) and how companies like H&R Block are making a staggering amount of money off of people who choose to use this service. The chapter also includes footnotes that might lead to some interesting references, but I can't locate my copy right now to suggest any (sorry).

Aparrantly if you charge it all up front as a "fee" it isn't usury.

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Author: didaskei One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522521 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 11:43 AM
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Such business practices are the result of a culture that asks "does it work?" (utility) rather than "is it right?" (moral idealism)

I don't mean to sound "preachy" but this is something I have been thinking about lately as well.

The apostle Paul says "but God has chosen the foolish things of this world to confound the wise" (1 Corinthians 1:27). Often doing the right thing may seem foolish (which can be an appropriate pun for this board).

Food for thought. Blessings!

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Author: TartyMae Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522524 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 11:46 AM
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ARR, this link explains the how the check cashing places get away with it.

http://slate.msn.com/id/2059386/

---



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Author: TartyMae Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522537 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 12:03 PM
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What leads them to this is the fact that they live paycheck to paycheck.

1) Many have bad credit.
2) If they can get a credit card, it's a secured card with a small limit.

I have a friend who has had to make use of services like this on several occasions because he has bad credit and has had emergencies come up that he doesn't have the cash to cover.

He works 35 hours a week as the IT person for a local market research group. He has no health insurance. He has no car. The local bus service is crappy at best, and this job is within easy walking distance.

He's got massive dental problems and is in considerable pain. A dentist tells him that he's going to need $800 in dental work, and since he has no insurance and bad credit, the dentist wants $400 cash, up front and the rest can be made in payments.

My friend has $250 in cash in his shoebox. Hello "Check 2 Cash". No other place will give him a tiny on the spot loan. He can't go to a regular bank because (a) they don't offer services like this and (b) he doesn't have a chequing account because he can't find a place in walking distance that doesn't charge him $10/mo for having an under $700 balence.

I've offered, in cases like this, to give him a cash gift to cover what he's short, but he's a proud man and refuses.


If regular banks would get into the microloan business, they could make $$$. If regular banks didn't charge you $10-$20 for having less than several hundred dollars in your account, more people might have chequing and savings accounts.

(Actually, I'm rather pissed that my bank will charge me if my balence ever falls below $800. This means that to cover my average monthly expenses, I have to keep $1600 minimum tied up in a non interest bearing account.)








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Author: cattleman22 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522539 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 12:06 PM
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{{If regular banks would get into the microloan business, they could make $$$. If regular banks didn't charge you $10-$20 for having less than several hundred dollars in your account, more people might have chequing and savings accounts.

(Actually, I'm rather pissed that my bank will charge me if my balence ever falls below $800. This means that to cover my average monthly expenses, I have to keep $1600 minimum tied up in a non interest bearing account.)}}


Why are you pissed about that? I imagine from the bank's standpoint that an account with more money in it is less likely to go overdrawn.


c

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Author: AngryPuppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522550 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 12:23 PM
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He's got massive dental problems and is in considerable pain. A dentist tells him that he's going to need $800 in dental work, and since he has no insurance and bad credit, the dentist wants $400 cash, up front and the rest can be made in payments.


Did he wake up one morning with dental problems or is this something he's known about for years and is starting to do something about it?

IMHO, the only reason to go to one of these places is for a medical emergency. Everything else can wait one or two weeks, including the power company shutting of your electricity.

Of course, it's easy for me to mock these people as idiots since I'm not in their shoes.

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Author: 2195501y Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522635 of 886574
Subject: Re: The antithesis of LBYM Date: 5/12/2004 4:06 PM
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{{If regular banks would get into the microloan business, they could make $$$. If regular banks didn't charge you $10-$20 for having less than several hundred dollars in your account, more people might have chequing and savings accounts.

(Actually, I'm rather pissed that my bank will charge me if my balence ever falls below $800. This means that to cover my average monthly expenses, I have to keep $1600 minimum tied up in a non interest bearing account.)}}


Why are you pissed about that? I imagine from the bank's standpoint that an account with more money in it is less likely to go overdrawn.

Why should she care about her bank's standpoint?

2195501y

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Author: MaestroCindi Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522847 of 886574
Subject: Re: The antithesis of LBYM Date: 5/13/2004 1:11 PM
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Why should she care about her bank's standpoint?

Why should the bank care about her standpoint? The average person needs the bank more than the banks need the average customer. They'd much rather spend their efforts on commercial clients. That's why many charge minimum balance fees because it's just not worth it to them to keep small accounts.

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Author: friendlygirl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522910 of 886574
Subject: Re: The antithesis of LBYM Date: 5/13/2004 2:53 PM
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Why should the bank care about her standpoint? The average person needs the bank more than the banks need the average customer. They'd much rather spend their efforts on commercial clients. That's why many charge minimum balance fees because it's just not worth it to them to keep small accounts.

Give me a break. C'mon, people, she said she was pissed about it. She didn't say "after carefully reasoned thought, I believe that my bank is being fundamentally unfair to me." I know you get annoyed about things, too. The OP just chose to express it this time.


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Author: PanemetCircenses Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522914 of 886574
Subject: Re: The antithesis of LBYM Date: 5/13/2004 3:00 PM
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Why should she care about her bank's standpoint?

Because if she understands their rationale, she can make more rational, informed decisions?

There's a reason behind the policy. Maybe the reason is valid and maybe it ain't, but actively ignoring it isn't likely to be helpful.

--B+C

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Author: cattleman22 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 522982 of 886574
Subject: Re: The antithesis of LBYM Date: 5/13/2004 5:57 PM
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{{Why should she care about her bank's standpoint? }}


Because she would then realize that it probably does not make financial sense and not just the bank trying to screw people. That might just lessen her sense of feeling angry.



c

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Author: 2195501y Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 523003 of 886574
Subject: Re: The antithesis of LBYM Date: 5/13/2004 7:34 PM
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{{Why should she care about her bank's standpoint? }}

Because she would then realize that it probably does not make financial sense and not just the bank trying to screw people. That might just lessen her sense of feeling angry.

Her anger is caused by inconvenience not by whether it makes financial sense for the bank.

And whyever should she value her bank's convenience above hers?

2195501y

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Author: WhitemiataXP Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 523058 of 886574
Subject: Re: The antithesis of LBYM Date: 5/14/2004 7:16 AM
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(Actually, I'm rather pissed that my bank will charge me if my balence ever falls below $800. This means that to cover my average monthly expenses, I have to keep $1600 minimum tied up in a non interest bearing account.)


I disagree.

That means you need to find yourself a different bank.

Alessandro

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Author: cattleman22 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 523216 of 886574
Subject: Re: The antithesis of LBYM Date: 5/14/2004 3:05 PM
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{{Her anger is caused by inconvenience not by whether it makes financial sense for the bank.

And whyever should she value her bank's convenience above hers? }}


It inconveniences me that I have to pay money to get gas. Yet it would be unreasonable for me to get upset with that. It is the same way with a bank requiring a minimum balance to avoid fees. It may incovenience her, but it seems unreasonable to get upset (pissed) at that.


c


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Author: 2195501y Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 523319 of 886574
Subject: Re: The antithesis of LBYM Date: 5/14/2004 7:16 PM
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It inconveniences me that I have to pay money to get gas. Yet it would be unreasonable for me to get upset with that. It is the same way with a bank requiring a minimum balance to avoid fees. It may incovenience her, but it seems unreasonable to get upset (pissed) at that.

Not so. The practice of exchanging goods (gas) for money is universal in the US, whereas the practice of requiring a $800.00 minimum daily balance in a non-interest checking account is non-universal.

Therefore, your (hypothetical) inconveniece is unreasonable, whereas hers is not.

2195501y

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Author: TMFEldrehad Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 523320 of 886574
Subject: Re: The antithesis of LBYM Date: 5/14/2004 7:19 PM
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Therefore, your (hypothetical) inconveniece is unreasonable, whereas hers is not.

A reasonable person would simply switch banks.

If one fails to shop around, and ends up not getting the best deal as a result, one has only oneself to blame.

Regards,

Eldrehad



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Author: foolishjosh Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 523402 of 886574
Subject: Re: The antithesis of LBYM Date: 5/15/2004 7:27 AM
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(Actually, I'm rather pissed that my bank will charge me if my balence ever falls below $800. This means that to cover my average monthly expenses, I have to keep $1600 minimum tied up in a non interest bearing account.)


hearing this makes me really appreciate my credit union. i've never paid a fee, no matter how low my account balance gets.

and the biggest perk?? i can withdrawl cash anywhere from any ATM machine in the world for free. my CU will reverse all ATM fees.

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