U.S. Bank recently introduced an innovative new small-dollar loan item. By the bank’s own description, it is a high-cost item, at 70-88% APR.
High-cost loans by banking institutions give you a mirage of respectability. An element of the impression could be the idea that is misguided restricting payment size to 5% of revenues means the mortgage is affordable for the majority of borrowers. However these services and products is going to be unaffordable for a lot of borrowers and fundamentally erode defenses from predatory financing over the board.
Many years ago, a few banking institutions had been making triple-digit rate of interest, unaffordable pay day loans that drained consumers of half a billion bucks per year.