Sick of sifting through e-mail spam? Make it stop!

Everyone who does business online needs to know how to keep e-mail inboxes from filling up with unwanted junk. Here are a few practical tips that can help.

Have more than one e-mail

Don’t use the e-mail you give out to friends and family for business. Keeping your business and personal affairs separate will save you a lot of grief. Have at least two e-mails: one to use for friends and family and the other to give out to businesses.

Don’t give out cell phone numbers

Use a land line when dealing with businesses, and make sure you register it on the National Do Not Call list. If solicitors call, tell them the first time they are not allowed to call that number. Violations of Do Not Call regulations can amount to hefty fines.

This also protects your cell phone from unwanted text messages. If you do get a text from a solicitor, reply “STOP.” Fines for SMS spam can be very high. Still, the best defense is to avoid giving out your cell number online.

What to do if you already gave out your e-mail to businesses

If your e-mail address is being bombarded by spammers, the best thing to do might be to abandon your e-mail and start over. This is a particularly good option if you only have one e-mail. Most new e-mail accounts allow you to announce to contacts from your old email that you have a new e-mail. Get a new e-mail address and notify only those who you wish to continue receiving mail from.

Want to keep your e-mail?

If you’re receiving too much e-mail spam but you want to keep your current e-mail address, there are a few things that can make life a little easier. First, if your e-mail provider provides the option, you can report e-mails as spam. However, sometimes this can up your spam folder and make it difficult to find and pull out good e-mails that accidentally made their way into it.

Filters are your friend

Learning how to create custom filters is a great way to clean up your e-mail account. Most major e-mail providers have a filtering system. Many let you create rules that will automatically delete specific incoming message.

Example:

Any email from @toomuchemail.com should go straight to spam and skip inbox.
or
Any email from @toomuchemail.com should be automatically deleted and reported as spam.
or
Any email with “THIS WORD” in it should be sent to spam or auto deleted.

There are plenty of filter combinations you can set up. Look for “Options” or “Settings” or a similar navigation link in your e-mail to find the right section of the account to create these filters. Many e-mail systems have help guides that show you how to make these types of filters.

Avoid the frustrations

There is nothing more frustrating than getting too many e-mails and wasting your time deleting them. Make those chores automatic if you  want to keep an e-mail account as your primary e-mail. Remember, if you do want to make a new e-mail account, you don’t have to abandon the other; keep it for future dealings you have with companies online.

The Federal Reserve, and chairman Ben Bernanke, have released data on which institutions received installment loans in the bailouts. Image from Wikimedia Commons.

The Federal Reserve has opened up the books on which companies received installment loans in the bailouts. There weren’t too many huge surprises, but the amount of instant cash wired out was staggering. The Fed lent more than $3 trillion in total.

Huge installment loans from the Federal Reserve

The Federal Reserve, headed by chairman Ben Bernanke, was a heavy player in the bailout programs, which lent trillions in installment loans to various banks and investment houses as part of the bailouts. Since it is a loosely federal organization, it does have to disclose some data. Recently, the information about which companies received large money loans from the Fed was released. Between 2008 and 2009, when the Troubled Asset Relief Program, or TARP, was going full tilt, nearly 21,000 different banks, investment houses and companies received loans from the Federal Reserve, according to the Washington Post. In total, those loans totaled more than $3 trillion. Controversial recipients were a number of overseas banks, such as the Development Bank of Korea, which borrowed billions. Deutsche Bank of Germany, and UBS of Switzerland also borrowed heavily from the Fed.

Trillions more in short term loans

The Federal Reserve also lent out an even larger amount of short term loans, though lending overnight loans for banks is within the scope of the Reserve as a lender of last resort. However, the overnight short term loans were not exactly the size of typical short term loans, like payday loans; more than $9 trillion went out in overnight lending, according to CNN. The interest assessed to most entities that were borrowing money from the Fed ranged between 0.5 to 3.5 percent interest, which is far less than most personal loans, to be sure.

The silver lining

The Federal Reserve has a lot of control over the supply and value of American currency, and the amount of money it lent is staggering. However, the Federal Reserve has already been repaid by most of the entities it lent money to and managed to turn a profit on the loans.

Sources

Washington Post

CNN

You can get a cash advance on checking or a credit card, but you may be better off with a payday loan. Image from Wikimedia Commons.

Fees for a cash advance from a credit card or on a line of credit are rising. After the passage of the CARD Act, companies that offer loan credit through credit cards have to find ways to boost their bottom line. If it keeps up, consumers may be better off with a payday loan.

Cash advance fees are going up

The most common method of getting instant cash from credit is to go to a bank, in case you run into overdraft or need a loan until payday. A person simply draws out a certain amount of instant cash from their line of credit into their checking account, and then the balance is paid off the second the next deposit into said account is received. Bank of America and Wells Fargo charge about $2 per every $20 loaned, or about $10 per every $100. Another way to do it is to get a cash advance from a credit card. Essentially, a person withdraws money from their line of credit on the card, and has to pay a fee on top of the monthly interest. Those fees, according to Bankrate, have been increasing since the passage of the CARD Act of 2009.

Then there is a payday loan

Granted, the fees have only gone up 1 percent in that time. However, when that balance, along with that fee, is added to a balance, the interest on it can add up over a long time if it isn’t paid off. Lines of credit – like credit cards – are revolving, or in other words a person has to make payments. In essence, credit cards are revolving installment loans with a plastic card tied to them. Checking advances, like payday loans can be, have to be paid off with the next deposit.

The risk

The only thing is that a payday loan lender has more flexibility with payment plans. A bank will simply take the amount owed from a cash advance, and not offer a payment plan. A payday loan store can offer a little more flexibility. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

The Federal Reserve is reporting that fewer consumers are borrowing installment loans and credit card loans. Image from Wikimedia Commons.

Economic data is indicating that demand for large consumer loans, like installment loans and credit card loans, has declined. The Federal Reserve has reported that there is actually plenty of available instant cash for lending, but no one wants to borrow. Americans are tightening their belts, as fewer people are seeing debt as an asset.

Consumer installment loans less popular

The Federal Reserve has reported recently that the demand for larger finance loans, such as personal loans and installment loans for consumers from banks, has been declining drastically, according to Bloomberg. Banks have been loosening credit restrictions for the past several months running, and fewer people are seeking loan lenders. Mortgage demand has also been weak. Granted, high unemployment makes just about anyone uneasy, but it seems that Americans are starting to reach a different conclusion about debt than in the past few years. Many feel it’s better to pay off and close the credit cards or decline a cash advance on home equity than get further in the hole.

High debt levels receding

Currently, there is about $11.6 trillion in debt held by Americans. That means a lot of payday cash has to get sent to the bank instead of one’s own pocket. The amount of debt that people have been willing to take on is unprecedented in American history. With the costs of owning a home or getting a college education, or even getting basic medical care, it’s no wonder some people wind up running for payday loans at times to keep up. After all, the more debt people are saddled with, the less extra cash they have in their own pockets.

Consumers avoiding debt

Though some things are seen as good debt– such as a home loan or a college loan — a large debt load is never good. It’s no wonder that the fastest growing market segment in finance is payday lending. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Unless one wants small loans, the credit market's incredibly high credit rating requirements leave many grasping at straws when they need financing. Image from Wikimedia Commons.

Demand for bank loans for housing is very low, even though rates are at the lowest in decades. It’s great for those with perfect credit scores, but small loans until payday may be the only credit available for a lot of people for some time.

Demand for mortgage loans drops

The bottom fell out of the real estate market, and it has been scrambling to get back to health ever since. There were some signs of life following the homeowner tax credit, but since it expired, demand for bank loans has stayed low. In fact, according to USA Today, the percentage of Americans counted as homeowners is at the lowest level in more than a decade. The 66.9 percent of Americans that own their homes, or have secured financing through a loan lender to buy a home, has not changed all summer, indicating that people either don’t want, or can’t get a loan to buy a house. It is no surprise that the only people who can get financing have near perfect credit.

Small loans might be all that is left

Small loans like payday loans or cash advances may be the only source of credit left for many people. It’s a growing segment. The payday lending industry began sometime in the late 1980s, and by the early 2000s, had more locations open than McDonald’s or Starbucks. Credit is something that will always be in demand, including a loan until payday, even if states are starting to regulate payday loans out of business.

Recovery will take some time

The only credit segment in the economy that is still booming is for small loans for people with bad credit. Payday lenders only started because mainstream finance wouldn’t touch the people they sought to extend a hand to. It may take awhile before things are back to normal. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Ignoring mainstream consumer debt while criticizing payday loans as a debt trap is like killing the anchovies to save the sharks. Image from Wikimedia Commons.

Even with a down credit market, consumer debt levels make a payday loan debt trap seem like small potatoes. Most studies of the payday lending industry indicate that all payday lenders in America do less than $50 billion a year in business. There is 20 times that amount in outstanding debt on credit cards. Consumer debt, which people are encouraged to take on, is more of a debt trap than any payday loan could be.

$11 trillion debt trap is not from payday loans

According to Fortune, the mortgage industry does far more in business than payday loan lenders do. In fact, there is $10.6 trillion in outstanding mortgage debt. Mortgages, if they are configured with prepayment penalties, are meant to keep people paying.Credit cards are, too. There’s about $822 billion in debt on credit cards. Aside from mortgage loans and credit cards, installment loan debt, or debt from student loans, auto loans, and so forth, totals $1.6 trillion. Even more astounding is that these figures are a reduction from previous years.

The payday loan industry could not compete if it wanted to

The payday loan industry is 20 times smaller than the credit card industry.  The sum total of the all cash advances and payday loans lent out is less than $50 billion per year. Furthermore, most studies of profitability of the short term loan industry indicate profits at the largest of payday lenders are 10 percent or less. With such small margins for profit, according to the research that has been done, there is no way that any loan until payday is nearly as bad as critics contend.

Small fish in a huge pond

Payday loans are such a small portion of the overall credit market, that it seems ridiculous to single them out compared to other sources of debt. However, payday lenders don’t have the benefit of multi-billion dollar ad campaigns. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Things like recent gains for financial services giant Dollar Financial prove that demand for services like payday loans isn't diminishing. Image from Wikimedia Commons.

Recent earnings gains for financial service giant Dollar Financial Group indicate demand for payday loans and other services hasn’t diminished. Alternative financial service providers, or AFSPs as they are called, have a long history in the U.S., and indeed, throughout the world. The company, which offers check cashing, money orders and pawn loans as well as cash advances, is having a banner year.

Dollar Financial among largest payday loan lenders

Dollar Financial Group is one of the largest among corporate payday loans lenders, although that isn’t the largest of the company’s offerings. Payday loans and cash advances only make up 50 percent of how the company makes a pay day, with the other half being from check cashing, pawn loans, military loans and other financial services. Out of the largest global alternative financial services firms that are publicly traded on the market, Dollar Financial realized the greatest gains this quarter. Profits were $28.7 million this quarter with only 15.2 percent of loan revenue being lost, though payday advance loans are only 9 percent of its business in the U.S., according to MSNBC.

Demand for services like payday lenders are constant

There will always be a demand for alternative financial services, like payday loans, short term loans and check cashing outlets. Granted, the demand isn’t as huge as one might think. People who don’t use banks for their every financial service need fall into two categories, according to the FDIC and the Federal Reserve. There are the “under banked,” who use alternative financial services but have bank accounts, and the “unbanked,” who have no bank account whatsoever. The underbanked amount to just under 18 percent of the U.S. population, and the unbanked make up around 10 percent.

The demand will remain

Alternative financial services have a long history. Pawn lenders and short term loan lenders, like payday lenders, have been around in some form since before the Roman Empire existed. Obviously, with evidence like the booming business in companies like Dollar Financial, demand is not going away. You can read more in the Payday Loan Fact and Statistics Report on Personal Money Market.

Some contend that if you borrow short term loans, you'll be bankrupt and homeless soon after. No such correlation exists. Image from Wikimedia Commons.

Small short term loans like payday loans don’t cause bankruptcy. It’s been asserted by some that short term loans do. However, there has not been confirmation for that. Usually, for people to file for bankruptcy, they need to have debts of more than a few hundred dollars. The number of short term loan borrowers that file for bankruptcy is insignificant.

Short term loans actually prevent bankruptcy

Critics of payday loan and short term loan lenders contend that people will get sucked into a spiral of debt and be bankrupt within months if they so much as cast their eyes at a payday loan store. If that were true, no one would borrow them. Not only that, but a wealth of evidence would point to it, like bankruptcy filings. Serious study of the cash advance industry indicated that the correlation between borrowing money from a lender and bankruptcy was incredibly thin. In fact, according to CBS, a 2009 study by the American Journal of Medicine, six out of every 10 bankruptcies were due to medical expenses.

Link is thin at best

One study found that there was a slight correlation between payday customers in Texas and bankruptcy filings, although the number of payday customers who filed for bankruptcy in the study was less than 2 percent of those studied. A study conducted after the bans on payday loans were enacted in Georgia and Oregon found that more filings for Chapter 7 bankruptcy were observed in areas where payday lending was banned.

Extraordinary claims need proof

Because most studies of the demand for short term loans have found that unexpected expenses were the most common reason for borrowing, it is not likely that payday loans have much, if any, effect on personal bankruptcy. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Social crusaders want the payday advance industry regulated, even out of business. However, a lot of the industry already regulates itself. Image from Wikimedia Commons.

Many critics of the payday advance industry have opined that the industry needs greater regulatory control. Numerous states have put interest rate caps, effectively price ceilings, in place which make it hard for loan lenders to make a living. How many payday loans a person can borrow has also been limited by statutes. The calls for new laws rarely address how much self-regulation the industry already does.

Case for regulating payday advance loans

There have been numerous campaigns and calls for the payday advance loans industry to be regulated. Some people want cash advances as a product regulated completely out of business. To be fair, there are “bad apples” in the industry. In fact, a debt collector for a payday loan lending outfit in Oklahoma is being sued for violating the Fair Debt Collection Practices Act by impersonating a government official, according to Consumer Affairs. It would seem that there should be strong laws set in place against short term loan lenders so that they cannot abuse people with impunity. However, the payday advance industry has been self-regulating itself for years.

Best Practices

There are trade organizations to which payday loan lenders belong at local, state and national levels. Many of these organizations set a code of ethics for themselves, known as Best Practices. The Best Practices are often similar if not the same across trade organizations. For instance, there is disclosing rates and fees up front to customers. Practices also will limit the number of “roll overs,” or renewal of loans to customers if there is a pattern of repeat borrowing. They also mandate adherence to the law regarding collections, and encourage customers to report lenders not in compliance with Best Practices to both the organization a lender belongs to, and also to authorities.

Look for membership

A potential payday advance loan customer should check out a prospective lender, and see if they are affiliated with any such organization. There should be a seal of membership in a payday loan store or on a website. Look for members of the Online Lenders Alliance, Community Financial Service Association of America or Financial Service Centers of America. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Caps are great on heads, but no so great for cash advance lenders. Image from Wikimedia Commons.

One of the most common regulations on the cash advance industry is to cap interest rates. It may seem like it’s a good thing to do to protect consumers from unfair interest rates. In reality, interest rate caps are an unfair standard on cash advance loans. Furthermore, rate caps constrain businesses in an industry in which almost half of all loan lenders are small business owners.

The cash advance rate cap uses bad math

Many states have introduced initiatives that cap interest rates on loans, aimed at capping the rate of a cash advance, usually at 36 percent APR. It seems like an altruistic thing to do, but there are problems with a rate of 36 percent. First, one can hardly assess the fees on a cash advance or payday loan as APR. Annualized Percentage Rates should hardly apply to a loan that matures in two weeks or less. Assume a loan lender assesses a fee of $20 per $100 loaned. If that $20 fee were compounding once a month, the APR is 240 percent. If it is assumed to compound every two weeks, that $20 fee is 480 percent annual interest. However a fee of $20 per $100 assessed in simple interest, or a ratio of the total amount paid back to the amount borrowed, it is only 20 percent interest.

Cui Bono

The phrase “cui bono”, in Latin, basically means “Who Benefits?” In the case of a short term loan rate cap, the beneficiary is banks and credit unions. Credit cards look a lot more attractive than payday loans when APR is the standard.  However, if the total a person pays back were divided by the total amount of credit used, as in simple interest, payday advance loans start to look a lot better.

Price ceilings are bad

Essentially rate caps function as price ceilings, where a business has to charge no more than a certain amount. This means that the margin for profit is drastically reduced, and the consumer cannot benefit from price competition. About 50 percent of all payday loan store owners are independent small business owners, not giant corporations. Is that who should be punished in this economy? You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Accusations of small loans lenders lobbying like Jack Abramoff did are ridiculous, because they can't afford it. Image from Wikimedia Commons.

Any industry can make campaign contributions, even small loans lenders like payday advance lenders. However, according to some people any campaign contribution is tantamount to bribery. For instance, any elected official that is opposed to capping or banning payday loans is automatically assumed to have been bought off. The hitch is that as an industry, loan lenders don’t have that kind of clout.

Small loan industry accused of buying officials

Like any trade organization or concern, small loan lenders like payday loan and installment loan lenders can lobby politicians to voice their concerns or make sure they get a fair shake. Members of these organizations make campaign contributions, which they are legally allowed to do. Sometimes they host conferences that officials are invited to, and there are plenty of other organizations that lobby incumbents or candidates. Yet a double standard is often observed. For instance, in a recent New Mexico gubernatorial debate, according to the New Mexico Independent, Democratic candidate Diane Denish practically accused Susana Martinez of being bribed by payday loan lenders because a fundraiser for Martinez was partially run by a lobbyist employed by the alternative financial services industry.

Who makes the rules?

Just because any one industry makes contributions to a candidate doesn’t mean a whole lot. Also, who gets to decide which organizations are morally acceptable enough to make donations? Besides, payday loan and small loan lenders as an industry can’t afford to actually buy off anyone. For instance, Congressional Rep. Heath Shuler of North Carolina received $57,900 from payday lending organizations for his 2010 election fund, and that’s the industry as a whole. Senator Chris Dodd, by comparison received $152,100 from the Royal Bank of Scotland alone in 2010. Anyone can look at lobbying data on OpenSecrets.org, and may be surprised at what they find about their own representatives.

Small fish

The contributions small loan lenders can make as an industry are dwarfed when it comes to other lobbies, such as banks and high finance. The biggest contributor to election campaigns, far and away, is unions. Looking at history, unions are hardly squeaky clean by any stretch of the imagination. Contributions that small hardly makes a bribe. You can read more in Payday Loan Facts and Statistics Report on Personal Money Market.

As working class Americans have seen their wages stagnate, they are faced with problems much bigger than payday loans. Image from Wikimedia Commons.

Some claim payday loans and the ensuing debt trap are a huge obstacle to the middle and low income classes. The evidence for that claim doesn’t really hold up. In fact, it distracts from the problems facing working Americans. A person will only get a cash advance if it’s needed. Furthermore, there are reasons why a loan until payday actually helps more people than ever.

Wages and costs are bigger problems than payday loans

Numerous studies on the demand for and use of payday loans point to usually one factor that explains why anyone goes to borrow money from a payday loan lender: unexpected expenses. For example, if a water heater quits or a tire picks up a nail, the cost is more than a person can cover between the time that it happens and next pay day. There are multiple reasons fewer people are able to meet these expenses. First of all, overall wages have been stagnant for a long time. However, living costs are going up, especially for health care. In fact, health care costs are the cause of 60 percent of personal bankruptcies.

Wage stagnation

A decrease in wages during a recession is to be expected. The labor market has been depressed since 2008 but has held at about 9.5 percent unemployment. That said, wages have actually been falling since 2000, according to ABC. According to a report by the White House Council of Economic Advisers, wage stagnation in that time period is partially linked to an increase in cost of health insurance. Stagnating wages, combined with inflation, is a recipe for middle class disaster. Considering how many more people are out of work and have had their homes foreclosed, the problem may be getting worse. Payday loan lending is the least of middle class problems.

At a disadvantage

The middle class is at a disadvantage of epic proportions. As early as 2005, it was found that 10 percent of the nation held 70 percent of the wealth. The lack of wealth creating opportunities is a far more dangerous problem than any small dollar loan product. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Payday loans have clearer terms than credit cards. Image from Wikimedia Commons.

Stereotypes exist about many things, including lenders and borrowers of payday loans. A lot of people have the idea that the people who borrow money from such lenders don’t know what they are getting into. Allegations are often made of undisclosed terms and deceptive advertising. However, like most stereotypes, they aren’t reflected in reality.

Terms of payday loans must be disclosed

Any loan lender, including a lender of payday loans, has to disclose the terms of the loan up front. It is mandated by a law called the Truth In Lending Act, which was passed in 1968. In fact, if a person walks into any garden variety payday loan store, chances are that the rates, fees and terms will be displayed prominently in the lobby. The trade groups that payday loan and cash advance lenders belong to all have a code of standards referred to as “Best Practices.” Those standards include disclosing all terms up front and full compliance with the Truth In Lending Act. These Best Practices are mandated by the Community Financial Services Association of America, the Online Lenders Alliance and the Financial Service Centers of America.

Studies disprove stereotypes

Not only do terms have to be disclosed, but studies indicate that payday loan customers knew exactly what they were doing. Even as early as 2001, studies of short term loan customers revealed that the stereotypes didn’t hold up. One study found that of the payday loan store customers surveyed, 95.7 percent knew what the finance charges on their loans were. Of those same customers,  78 percent remembered receiving disclosure of the APR. A person can’t be fooled by what they actually know.

Hysterical claims never hold up

Though social crusaders often mean well enough, the facts can sometimes be omitted to make people out to be victims for the sake of being sensational. The hype often doesn’t live up to reality. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Urban blight and cash advance loans have as much to do with each other as chocolate and the fall of the Roman Empire. Image from wikimedia commons.

The universe operates on a system of cause and effect, which contradicts one of the claims some make about cash advance loans. For instance, there are people who blame a phenomenon called “urban blight” on cash advance loan lenders. The phenomenon of urban blight, or urban decay, began far before the cash advance industry even existed. That claim uses what is called a logical fallacy.

Cash advance loans blamed for urban blight

Numerous people have pointed to the cash advance loans industry as a culprit of urban blight. In fact, some cities have run cash advance and payday loan stores out of town because they believe that idea. Urban blight or urban decay is a phenomenon that has usually been associated more with a weakened economy, rather than the emergence of a single factor such as payday lending. It often goes without saying that this kind of decay really began decades before payday loans, as a product, even existed. It isn’t known where the first actual payday loan store was opened, but it is believed that among the first was Q.C. Holdings in 1988.

Fallacy of logic

The idea that payday loan lenders cause urban decay is a logical fallacy called “cum hoc ergo propter hoc.” Literally it means “with this, therefore because of this.” Basically, it means that because two things coincide, there must be a cause and effect relationship. If that were true, then a Pepsi commercial could cause a football team to lose the Super Bowl. There’s no evidence that payday lending is a cause of poverty, proximate or otherwise. One has to bear in mind that there was abysmal, wretched poverty in the world, including the United States, long before payday lenders arrived and even before the modern financial system did.

Dubious attrition

Poverty has a multitude of causes. Given that many negative economic conditions have nothing to do with short term consumer lending, crediting payday loans with urban blight it is a dubious attrition. You can read more in the Payday Loan Facts and Statistics report on Personal Money Market.

Wells Fargo charges people $35 per overdraft, and at that rate, its cheaper to get a payday loan. Image from Wikimedia Commons.

It might seem inconceivable that Americans could save money by borrowing a payday loan sometimes. Industry critics usually have good intentions. However, something often goes unmentioned while the cash advance industry is raked over the coals. If an average person gets a payday loan to keep from going into overdraft, that person saves money.

An overdraft works like a payday loan

An overdraft charge works sort of similarly to payday loan, in a way. A certain amount of money is loaned, by a bank, and then a fee is assessed for lending the funds to cover a transactions. Basically, an overdraft is the same thing as a short term loan from a bank. The difference is, no one really wants to overdraft, and a lot of people do it accidentally. Thus, when a people overdraw their accounts, they aren’t usually choosing or deciding on the amount they want to borrow. And it adds up fast because if customers make multiple overdraft charges, the overdraft fee is charged each time. Overdraft fees from Bank of America and Wells Fargo are $35 per occurrence. It has been estimated that up to 60.4 percent of income for credit unions is from overdraft fee revenues, and more than 43 percent of non-interest income and 21 percent of net operating income for banks. That’s an awful lot of instant cash.

Overdrafts add up

A study published by Bretton Woods Inc. in 2010 reported that the average household with an active checking account incurred 12.7 overdraft fees or non-sufficient fund fees in 2009, which marked an increase from the 11.8 NSF/OD fees in 2008. The average NSF/OD fee, from the same study, was $29.58 in 2009, meaning that at 2009 rates, the average household with an active checking account pays $375.67 or more in OD/NSF fees annually. The average payday loan is $350, and the average fee is $47.50. Because multiple overdrafts can occur easily, and fees are charged per occurrence, it is cheaper to get a payday advance than an overdraft.

Banks are institutions

Why do banks get off the hook for these fees? Well, it’s simple. Banks are institutions, and some people think that institutions should never be held accountable because they are institutions. You can read more in the Payday Lending Facts and Statistics report on Personal Money Market.

To keep people safe from real gangsters, it's best to keep loan credit like payday loans legal. Image from Wikimedia Commons.

Loan credit that is considered subprime is something that will always exist. The mortgage crisis over the last few years brought the term “subprime” into the national lexicon, and it applies to borrowing money from a loan lender without the credit scores that a top notch, or prime, lender would lend to. Bad credit loans come in many forms, such as a payday loan, a home loan or a car loan.

Loan credit did not always depend on scores

Loan credit, or credit of some sort, has existed for a lot longer than the current system of finance. Often enough, what was needed to secure credit was the promise of a future pay day. For instance, the organization that later became Bank of America gained great success by offering quick and easy loans, secured only by a promise to repay, after the 1906 earthquake and subsequent fire that ravaged San Francisco. Credit cards didn’t exist until the latter half of the 20th century, but people still occasionally needed a loan until payday.

Real loan sharks

Today, people who have stable income and a bank account can get a payday loan if they need one. As long as a person is responsible when he or she borrows money from payday loan lenders, there is no danger. However, prior to the early 20th century, it was a different story. Back then, if people needed money, they had to go to an underground lender, or “salary buyer.” Essentially, a person would borrow a portion of his next paycheck, which had to be turned over to the salary buyer. However, salary buyers could charge whatever they wanted and extract payment any way they wanted.

Supply and demand are real

As result of public outrage at underground lenders like “salary buyers,” states passed small loan laws, which raised usury rates. That way, people could have a supply for demands that were met legally and safely. Banning payday loans will keep real loan sharks in business. You can read more in the Payday Loan Facts and Statistics report on Personal Money Market.

Mortgages are far more a debt trap than a payday loan could ever be. Image from Wikimedia Commons.

It is almost impossible to prove that such a thing exists as a payday loan debt trap. Like many social issues, the truth is a lot more complex than many would like to admit. For instance, it is true that a lot of people who borrow money from payday lenders take out multiple loans. However, it has not ever been proven that people are taking out new loans to cover their old ones, which is called a rollover.

The debt trap myth

The contention that payday loans trap a person into an endless cycle of debt has never been proved. However, a 2005 study found that many payday borrowers indeed did borrow money multiple times per year. One study found that 29.6 percent of payday borrowers surveyed had 14 or more loans in the previous calendar year and 9.9 percent took out two or fewer, but 28.1 percent had no renewals or rollovers. However, no study has ever ascertained why chronic borrowers, less than half of all payday loan store customers, borrow money with such frequency.

Lender of last resort

The reason why payday loan lenders exist is that they will loan to people that no other loan lender is willing to take a chance on. All a payday lender looks for is the ability to repay, not credit scores. The reason why people go to payday lenders is that they have nowhere else to turn to. A 2009 study of payday loan demand shows the number of people who borrow from multiple sources of credit is 91.6 percent. Johnathan Zinman found that 70 percent of the payday borrowers he surveyed either were not aware of or had no alternative to borrowing from a payday lender.

Credit has risks

Some payday advance customers borrow frequently. However, consider also the debt trap of credit cards and mortgages. Few people ever will own their home outright, as few people stay in the same house or city for long enough. Because more money is lent by banks and credit card companies, those debt traps are legitimate according to social crusaders. That is some severely fuzzy logic. You can read more in the Payday Loan Facts and Statistics report on Personal Money Market.

Payday loan lenders couldn't prey on the poor and desperate. If they did, they'd be out of business. Image from Wikimedia Commons.

It’s been alleged that personal loan lenders, like payday loan lenders, prey on the poor and desperate. The claim is that people that can barely scrape by are enticed to take out loans until payday. The payments are too much, and they get hooked into an endless cycle of debt. The catch, of course, is that payday lenders don’t prey on the poor. In fact, they couldn’t afford to prey on the poor if they tried.

The average payday loan customer

If it were true that payday loan lenders preyed on the poor, that would be reflected in demographic studies. Unfortunately for critics, that isn’t the case. The average short term loan borrower is actually the definition of middle class. The bulk of payday customers make between $25,000 and $50,000 per year, they are more likely to be high school graduates or have completed some college, be married, have children and be younger than 45 years of age. Part of the argument that payday loans are predatory hinge on the borrower being unable to repay. Given that many payday lenders barely make $2 of profit from a single loan, it is hard to believe that instant cash would be lent to anyone that couldn’t repay it.

Cash advance stores cannot lend to just anyone

The presumption would be that cash advance lenders will give money to anyone just to get their hooks in them. That is far from the truth. In fact, it was found that up to 20 percent of first time applicants are rejected by the average payday loan store, and 11 percent of all applications are turned down. This means that even a lender of small loans has some definite criteria. The most usual criteria for getting a payday loan? That’s easy. It’s having some definite payday cash coming in.

Crusaders’ claims do not hold water

The idea that payday lenders lend to anyone is ludicrous. If borrowers were unable to repay, no payday loan store would stay in business long. Furthermore, the profit margin is usually 10 percent or less. That’s far less than Bank of America could tolerate. You can find out more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Dayne's Tree Care

Ever wonder what kind of person climbs 100 feet in the air to trim the tree in your yard? Dayne’s Tree Care in Spokane, Washington, is owned and operated by Dayne Klündt. He grew up in the tree business. Even when very young you could often find him on job sites with his father Terry Klündt. With the economy the way it has been, it’s a hard business to be in, and it takes tough, honest, people to run a tree service.

History of tree trimming service

Tree trimming is often a generational carrier choice. Dayne’s father started working with a tree company in 1979 and by 1980 was a professional, experienced, state-licensed climber. He worked for the main Utility Company in Grass Valley, California, for more than 10 years before moving up to the Idaho/Washington area in 1984. There, he worked with some very well known tree companies, and before he knew it he was making a reputable name for himself. This was when Dayne was just 3 months old.

Dayne is a tree climber

Dayne quickly came to realize that he had the same love his father had for trees and wanted to be a climber just like him when he grew up, and that is exactly what he is doing. Dayne moved to Spokane in 2005 and started working for his dad’s business, Terry’s Tree Service. Dayne also worked with his dad in California for four years. Terry was able to buy Spokane Tree Service in February of 2007, and at this time Dayne was already following closely in his dad’s footsteps and was running a crew, climbing and doing all phases of tree care.

Dayne continues on despite hardship

Sadly, Terry Lee Klündt passed away in September of 2007. He was one of the best tree climbers in the area and he was able to pass on what he knew to Dayne Klündt. Although it was hard to go on without his dad, Dayne is succeeding and proud to remain in the tree profession. Even though Dayne does not operate as Spokane Tree Service he chooses to remain in the trade and decided to carry on under the new name of Dayne’s Tree Care.

Safety and tree health are top priority

Dayne works cautiously, and safety is the number one priority on his list. He will do all he can to save a tree if it can be done, as he is not in the business to only remove them but to keep them beautiful and healthy, too. Dayne does not need to use gaffs for climbing, which can harm trees, and therefore his work is healthier for the trees that he trims. After viewing your trees’ needs he can offer some accurate advice as to how best to save your tree or remove it as a last resort.

Some Services Offered By Dayne’s Tree Care

Word of mouth is Dayne’s best advertising

Dayne has many satisfied customers and references that can be supplied on request. So, no matter how big or small your tree care needs are remember the name, Dayne’s Tree Care and Dayne will come out and give you a bid for free. Next time you need any tree work done spring, winter, summer or fall, give Dayne’s Tree Care a call.

Unemployment office image from Flickr.

During the month of April, nonfarm payroll employment rose by 290,000. Despite this increase in employment, the unemployment rate in the United States increased up to 9.9 percent. Sizable employment gains occurred in manufacturing, professional and business services, health care and in leisure and hospitality. Federal government employment increased due to hiring of temporary workers for Census 2010. Since December, nonfarm payroll employment has expanded by 573,000 with 483,000 jobs added in the private sector. The vast majority of job growth occurred during the last 2 months.

Unemployment categories

Percentages of unemployed workers:

• Less than 5 weeks, 18.3 percent
• 5 to 14 weeks, 20.4 percent
• 15 weeks or more, 61.3 percent
• 15 to 26 weeks, 15.4 percent
• 27 weeks or more, 45.9 percent

In April, the civilian labor force participation rate increased by 0.3 percent to 65.2 percent, as the size of the labor force rose by 805,000. Since December, the participation rate has increased by 0.6 percent. The percentage of the U.S. population that is emploued rose to 58.8 percent during April.

Manufacturing, construction, business and temporary

Manufacturing added 44,000 jobs in April. Since December, factory employment has gone up by 101,000. Over the month, gains occurred in several durable goods industries, including fabricated metals (9,000) and machinery (7,000). Employment also grew in nondurable goods manufacturing (14,000). In April, construction employment edged up 14,000, following an increase of 26,000 in March. Over the month, nonresidential building and heavy construction added 9,000 jobs each.

Employment in professional and business services rose by 80,000 in April. Temporary help services continued to add jobs (26,000). Employment in this industry has increased by 330,000 since September 2009. Employment also rose over the month in services to buildings and dwellings 23,000 and in computer systems design 7,000.

Health care, hospitality and government

In April, health care employment grew by 20,000, including a gain of 6,000 in hospitals. Over the past year, health care employment has increased by 244,000.

Employment rose by 45,000 in leisure and hospitality over the month. Much of this increase occurred in accommodation and food services, which added 29,000 jobs. Food services employment has risen by 84,000 over the past four months, while accommodations has added 18,000 jobs over the past three months.

Federal government employment was up in April, reflecting the hiring of 66,000 temporary workers for the decennial census.

Consumer credit for first quarter declines

However, it is the health of the banking system — which can be determined by the outstanding credit and loans taken out by U.S. consumers — that provides a clearer picture of the true state of the economy and its health or distress.

From its January 2010 high of $2.746 billion in outstanding U.S. consumer credit, which most likely is due to paying down 2009 purchases during the holiday season, outstanding consumer credit has declined every month since January. Consumer credit has fallen to $2.446 billion in February and $2.433 billion in March 2010.

Those statistics show that most Americans are either saving more or cutting back spending to pay outstanding bills, thus not using credit to make as many new purchases. Thus, because of less consumer spending for the month of April, there are fewer Americans employed.

Sources:

U.S. Bureau of Labor Statistics

U.S. Federal Reserve Survey of “Consumer Credit Outstanding”