For more information on how Regions' payday loans work, read our FAQs.
Payday loans by Regions Bank carry triple-digit interest rates that exceed North Carolina’s usury limits.
Bank payday loans are marketed as a quick, easy way to meet a sudden need, and they must be repaid at the borrower’s next payday. But the interest rate is so high, and loan is due so quickly, that most cash-strapped borrowers have trouble repaying. Instead, they take out another loan to repay the first, and end up in a long and costly debt trap.
- Bank payday loan customers are in debt an average 175 days of the year.
- The average bank payday loan carries an annual interest rate of 365%.
- Customers of payday loan shops pay more overdraft fees than non-borrowers and are more likely to lose their bank accounts.
Bipartisan efforts have kept payday loans illegal in North Carolina.
In 2001, the North Carolina legislature took a clear stand against payday lending, through a successful bipartisan effort to keep payday lending out of our state.
- From 1997 to 2001, North Carolina exempted payday lenders from the state’s usury limits. The results were so harmful for NC families and military servicemembers that in 2001 the state legislature ended the experiment, deciding not to permit payday lending in the state.
- The NC Commissioner of Banks and Attorney General eliminated the last of the payday storefronts, and North Carolina has been free of payday loan shops since 2006.
Out-of-state Regions Bank is flouting our law and making payday loans in North Carolina.
Six years after North Carolina succeeded in ridding our state of payday lenders, Alabama-based Regions Bank is using an arcane provision of the banking laws to make payday loans here. This is just wrong.
- NC taxpayers helped bail out Regions Bank in 2008 (Regions took $3.5 billion.)
- Regions should respect our small-loan laws and stop making loans that exceed our usury limits.
Regions “Ready Advance” loans are as bad as storefront payday loans.
- Loan amounts can be up to 50% of the customer's semi-monthly direct deposits, up to $500 (the amount can be more if the bank agrees).
- The loan is due at the borrower’s next direct deposit.
- If direct deposits are insufficient to repay the loan within 35 days, Regions takes the funds anyway, even if this overdraws the bank account. The borrower is charged overdraft fees on top of loan cost.
- The loan cost is 10% of the loan amount, which works out to an APR of 365% on a typical loan.
- The bank does no underwriting to determine whether borrower can afford the loan.
What can we do?
- Urge the Commissioner of Banks and Attorney General to stop Regions’ payday lending in NC.
- Urge the Consumer Financial Protection Bureau and the Federal Reserve to stop Region’s payday lending.
- Tell Regions Bank: Stop payday loan-sharking in North Carolina. We didn’t stand for it before; we won’t stand for it now!