The End of Payday Loans or a Kinder, Gentler Predator?

Fintech products offer options and also high fees

Adam Hardy writes in Money.com that a number of cash-advance apps are suggesting they offer a viable alternative to payday loans but may instead offer a similar product in a more tech-friendly package.

Hardy reviews the policies and practices of apps such as Dave, Earnin, and Brigit and finds that:

“. . .consumer experts warn their fees are just as bad as — if not worse than — traditional payday loan APRs, with rates that can easily top 300%. And, they say, the apps can actually trigger overdraft fees.”

The high fees and APRs come as the backers of the apps suggest:

“. . . they’re ushering in the end of predatory payday loans and overdraft fees”

However, these apps lack the consumer protections of other credit products.

But regulatory guidance on newer fintech companies that offer cash advances and similar products has been somewhat mixed. As it stands, consumers currently don’t receive the same federal protections for a cash advance from a company like Earnin as they would for a cash advance or loan from a more traditional lender — from, say, a credit card company like Chase or even a payday lender like Amscot.

The piece on the high costs and fees of these apps comes as the Consumer Financial Protection Bureau (CFPB) has opened an inquiry into the practices…