How the Major Banks Finance Payday Lending Companies

Key Facts on Payday Lending:

  1. An estimated 120 million payday loans are issued annually in the US worth a total value of $42 Billion.
  2. The average effective interest rate on a payday loan is 455% (APR). For a loan of $300, a typical borrower pays on average $775, with $475 going to pay interest and fees over an average borrowing cycle.

    Watch the video of Mitzi Rivers-Singleton of Kansas who ended up paying $30,000 in fees for a $3,000 loan over a seven year period:

  3. There are some 17 major payday lending companies (both public and privately-held) that operate approximately half of the nation’s total of 22,000 payday lending outlets.
  4. Major banks provide over $1.5 Billion in credit available to fund major payday lending companies.
  5. The major banks funding payday lending include Wells Fargo, Bank of America, US Bank, JP Morgan Bank, and National City (PNC Financial Services Group).
  6. All together, the major banks directly finance the loans and operations of (at minimum) 38% of the entire payday lending industry, based on store locations.
  7. The major banks indirectly fund approximately 450,000 payday loans per year totaling $16.4 Billion in short-term payday loans.
  8. Wells Fargo is a major financier of payday lending and is involved with financing companies that operate one third (32%) of the entire payday lending industry, based on store locations.
  9. All of these above mentioned banks received TARP bailout funds in 2008-09 and have benefited from accessing capital at exceptionally low interest rates from the Federal Reserve.
  10. Major banks access credit from the Federal Reserve at 0.5% or less, these banks extend an estimated $1.5 Billion annually to eight major payday lending companies, who in turn use this credit to issue millions of payday loans to consumers every year at average rates of 400% APR.

Download the "How the Major Banks Finance Payday Lending" Report.

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