Bank of America Payday Loans

Bank of America Payday LoansThere is some confusion as to whether Bank of America issues payday loans or not. On their website they recommend against taking out cash advances, either through your credit card or from a payday lender. Further research uncovers that they are actually more involved in the payday loan process then you might suspect.

Most of the time people are using payday loans because the bank will not let them take out money in the form of a loan. Qualifications usually include having a 5 star credit rating, and an established track record of successful repayments. Many Bank of America customers are likely also payday loan customers because they couldn’t get a loan from their bank.

Bank of America seems to be playing both sides here because they’re turning customers away from traditional owns, and also funding payday loans with their investments. In fact, they are bankrolling one of America’s biggest payday lenders: Advance America. And we’re not talking about a small loan, we’re talking about hundreds of millions of dollars.

Bank of America Payday Loans: Can You Get One?

So basically if you take out a loan from Advance America you are really taking a loan from Bank of America. But it is not done directly, it’s just the essence of the deal that’s in place. This is because Advance America owes them so much money, and if they don’t repay it basically they hand over control of the company to Bank of America. They are joined at the hip, and it’s easy to see which company is in the driver’s seat.

Banks vs Payday Lenders
So technically Bank of America is not a payday lender, as that wouldn’t look good on paper to their shareholders or their corporate image, but they are as embedded in the process as any bank could be. If you go to one of their branches and ask for a payday loan they will tell you that they do not provide them. They will likely also hand you a pamphlet on how to better manage your money.

But in the future maybe they will simply point you to the nearest Advance America, a shameless plug for a company that is paying them large sums of money for borrowing even bigger sums. It’s pretty easy to see that there is a conflict of interest here, since Bank of America is a lender as well.

Official Policy
They’ve made it quite clear as to whether they think you should take out a payday loan. Their answer is that payday loan fees are too high and should be avoided. At the same time banks are responsible for the pay day loan industry existing at all. If they created a second tier personal loan that allow people to get smaller amounts of cash with less requirements necessary and with more reasonable fees the payday loan industry would quickly dry up.

Scratching Backs
This seems to be mutually beneficial relationship between Bank of America and Advance America. The terms of the loan agreement make it so that Advance America does not have to pay back much of the loan until far down the road. This allows them to make money from that money for several years, even paying dividends to stockholders with it. It’s the kind of deal making that is available to corporate entities, but that is not something that is available to individuals which is why they end up at payday lenders.

Bad Taste In Your Mouth
Knowing that big banks are financing payday lenders should leave a bad taste in your mouth. They are creating an industry, and then profiting off of it. They are turning people away and then funding the places they are turning them too. It’s classic double dealing but it is not exclusive to Bank of America or Advance America, everybody’s doing it.

This doesn’t make it any more right, of course, it seems like some sort of legislation should be passed against this practice. But Big Banks and some payday lenders both have lobbyists to make sure that they can do pretty much whatever they want. It’s a pretty sad state of affairs.

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