CASH ADVANCES RISE AS NATION'S CREDIT CRISIS DEEPENS

Monday/October 27/2008

As the nation's economic crisis deepens, so does the need to find cash to pay the bills.
Faced with tightened bank lending, many consumers have turned to outside sources to pay for their rent or doctor's expenses. Needing funds right away, they've found that cash advances often can be the answer. As a story at cbs.com details:
"In order to get a loan, customers fill out an application giving lenders access to personal information... After being cleared for the loan, the lender deposits the payday advance. The entire process usually takes less than 5 or 10 minutes."
Though getting a cash advance is simple and easy, experts advise shopping around to find the provider who is right for your needs.
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CASH-STRAPPED COUNTRY: BANKRUPTCY FILINGS NEAR ONE MILLION

As Americans face the realities of a tough economy, many are reacting by declaring bankruptcy.
Faced with rising mortgage and credit-card debt, a lot of people are opting just to throw in the towel. The number of personal filings totaled 934,009, up nearly a third from last year.
"As we continue to hear more bad economic news, we will continue to see bankruptcies spiral upwards," said Jack Williams, resident scholar at the American Bankruptcy Institute. Such news is expected to increase the number of payday advances, as Americans look for ways to manage debt.
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NEW HOUSING LAWS TO BENEFIT LOWER-INCOME EARNERS

In response to the recent housing-industry crisis, new legislation is expected to be signed by President Bush, including a trust fund to help protect low-income housing. "The funds (from the trust) would be allocated to the states, which would use the money to produce and preserve affordable housing focused on the lowest-income households," said Linda Couch of the National Low Income Housing Coalition. Couch said the fund could surpass a half billion dollars by the year 2011.
The average national rate on a 30-year fixed-rate mortgage climbed to 6.63 percent this week, forcing many lower-income Americans to seek short-term loans and other quick sources of financing. This includes cash advances, as many borrowers seek to leverage their next payday.
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LATE PAYMENTS THROUGH THE ROOF, SAYS AMEX

The number of Americans paying their credit-card bills late is on the rise, according to American Express.
"Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations," said company CEO Kenneth Chenault. American Express adopted a "cautious view" after cardholder spending slowed and overdue payments rose in December.
As credit conditions worsen, more Americans are turning to alternate sources of funds such as cash advances -- which can be repaid quickly, allowing the borrower to avoid high interest payments. Payday advance applications are expected to increase as Americans find paying their bills increasingly challenging.
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CASH ADVANCES RISE AS AMERICANS CUT BACK ON CREDIT

Once crazy for credit, Americans have been cutting back on the use of their cards -- or in some cases, cutting them to shreds.
Tired of paying for purchases made long ago (such as gas or a restaurant meal), people such as "Suzi" from Indianapolis have decided to go cold turkey, and closed their credit-card accounts. "If we want something (now), we pay for it in cash," she says. "If we can't afford it, we do without or wait."
The upside? "We no longer have to dread our bills in January," says Suzi.
Not surprisingly, this corresponds with the increase in payday advances taken out, as many people have found the single short-term fee preferable to ongoing interest charges.
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CREDIT CARDS FOR SUBPRIME CUSTOMERS FACE NEW SCRUTINY

CREDIT CARDS FOR SUBPRIME CUSTOMERS FACE NEW SCRUTINYCredit cards issued to customers with lesser credit are facing a new round of regulations designed to protect the cardholder from being overcharged.
These typically low-limit cards, sometimes known as "fee harvesters" because of their financial benefits to the issuer, carry fees and charges that aren't always readily obvious to the cardholder. However, there are signs that the gold mine may be closing, as the proposed regulations would require creditors to list fees upfront, especially if they exceed 25 percent of the customer's credit limit. Additionally, card issuers would have to include examples of the projected change in balance once these fees have been assessed.
Such developments should be of note to payday loan seekers, many of whom fall into the subprime category.
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PAYDAY LOAN RESTRICTIONS TREAT CONSUMERS "LIKE CHILDREN"

An article in the Montgomery Advertiser summed up recent efforts by certain states to restrict -- or even outlaw -- the availability of payday lending:
"Paternalism -- the belief that adults do not possess the ability to take care of themselves -- is the ideology behind bills being pushed in a number of state legislatures. By putting incredibly stringent restrictions on the service, such bills would effectively ban the practice of short-term "payday" lending, no matter how many people use it responsibly in times of crisis."
And the benefits of payday lending?
"The service allows consumers to borrow against a future paycheck, meaning that the car gets an urgent repair, a critical check doesn't bounce, or the heating bill gets paid. Used responsibly, payday lending can help a borrower stave off financial calamity."
We couldn't have said it better ourselves.
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