A new question has come up lately from our customers that asks: “Are debit card payday loans safe?”
This question kind of took us by surprise not because we have never heard it before but because we have heard it quite a bit in the past but not for some time.
Payday loan companies used to use these but in the last several years they have been advertising no debit card payday loans because the selling point of not needing a debit card was huge.
Now all of a sudden they are going back to the practice of using them again and we went looking to find out why.
We did a bit of research and found some interesting facts on why this is happening.
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Why Use Debit Cards?
We found out several reasons for payday loan companies wanting to go back to using debit cards to conduct payday loan business.
The obvious reason is to be able to hit your debit card for payments and also grant new loans they can directly deposit on these cards, thus making it easy to get repeat loans and keep customers coming back.
A good business practice for the loan companies but not so good for the borrowers, as the debt load can get out of hand incredibly fast with such easy access to multiple loans.
If you should get behind these companies will continuously hit your account in hopes of getting any amount you may have in the account, and they never give up.
Remember, you must give them all of your account information to use this method, and that is giving these companies control over your bank account.
Not a wise choice in our opinion.
Another Darker Reason
Many states are making online payday loans illegal and collection attempts by the loan companies are being denied by the banks, thus making it impossible for them to collect on the customer’s debt, or is it?
Minnesota, New York, and several other states now have the cooperation of credit unions and many banks in not honoring any payday loan transaction requests by the payday loan companies but, of course, they found a way around this.
They are now contacting existing borrowers and asking them to transfer all their transactions to the debit cards as a way of getting around the law, and it is working.
The problem is they are not informing the customers as to why they want them to do this.
By getting the customer to make this change, it allows the loan companies to continue doing business even in states that have made them illegal, and they do exactly that, continue to conduct5 business as usual.
They have been known to not give up on getting the borrowers to switch their loans over to debit cards, and in one instance made 36 calls in one 24 hour period to one customer, even threatening her with legal action if she did not comply.
Here is a good video addressing payday loan practices that are not on the up and up.
The efforts to get the banks to cooperate and deny access to customers accounts by the payday loan companies is working, and thus we have these collectors hounding customers to switch to debit cards, which the banks can not easily track.
See a complete list of states that have made payday loans illegal here: Wikipedia-Payday Loans
NOTE: Make sure your payday loan company is legally allowed to do business in your state.
In our opinion using debit cards for payday loans should be avoided and taking it a bit further if online payday loans are now illegal in your state, make sure to check the existing laws as you may be off the hook completely for your payday loan balance over the original amount borrowed.
In other words, you may only owe the principle borrowed or possibly even nothing at all.
I hope this information helps you in understanding some of the negative and illegal practices of payday loan companies and it is our hope that you avoid them in the future.
If you are currently experiencing out of control payday loan debt please give us a call toll-free at 1.877.280.5100 or fill out our form for YOUR free no-obligation quote on how we can help you.
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