Mainstream banks also offer payday-style loans
Nov 13, 2011 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- Tired of being buzzed into a storefront encased in bulletproof glass, Carl Martineau found a more dignified place to get a cash advance on his Social Security checks: a Berkeley branch of Wells Fargo Bank.
To California residents who just cannot make ends meet, the bank's polished decor looks so much more inviting than the gritty payday loan shops that offer bruising triple-digit interest rates in the state's poorest neighborhoods. However, mainstream financial institutions are increasingly peddling similar loans.
In California, payday lenders charge a 460 percent annual interest rate for a two-week cash advance on a borrower's pay or benefit check. The terms at major commercial banks are only slightly better -- an average of 365 percent for a 10-day cash advance.
"People who might know to stay away from payday lenders think that if a bank is offering it, it must be safe," said Lauren Saunders, managing attorney for the National Consumer Law Center. Yet "a bank payday loan has all the same problems a traditional payday loan has. You're getting sucked into the same debt trap."
Bank officials say low-income customers at times desperately need the cash advances. But they emphasize that they do not advise repeat borrowing because of the admittedly high cost of the product -- which banks say they do not heavily promote.
Yet Martineau, who lives in his Honda Civic and has relied on as many as five payday loans at a time from traditional
shops, sees the bank as a new salvation. He has arranged his first Wells Fargo advance to begin in December.
"Payday places have a lot of stigma. You really feel like you're at the bottom of the barrel," said Martineau, 59, who has struggled with manic depression most of his life. "Going to the bank is a lot more dignified. You don't feel so ostracized.

"I didn't make as much money as I could have in the private sector, but I did enjoy having things like seniority rights and having benefits." At least half the states allow eligible employees to turn unused sick time into cash when they retire or quit.

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Nov 13, 2011 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- Tired of being buzzed into a storefront encased in bulletproof glass, Carl Martineau found a more dignified place to get a cash advance on his Social Security
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