MILWAUKEE, June 4 /PRNewswire/ -- An article on AboutPaydayLoan.com describes what an APR% is, and how it is calculated. Of course, the thought of learning how to calculate an "Annual Percentage Rate" doesn't really excite many people, so the author applied APR's to different common scenarios, provided examples and online APR calculators to help.
Many Americans wonder what APR%'s look like, when applied to common "overdraft/NSF" scenarios. Unfortunately, this is a very common situation that most of people have had the bad luck to encounter at one time or another. Sometimes, it seems that no matter how hard you try, banks seem to find a way to "arrange" your payments in such a way that results in a series of costly overdrafts. A reader comment on describes the following "scenario"…
"Imagine you have $1100 in your account and do 6 separate debit charges at $20 a piece, a total of $120. Later in the day you write a $1050 check to pay for rent, unfortunately you have just overdrawn your account. There are some banks that will not simply charge you one time for overdrawing your account, they will push the rent check through and then the 6 debit charges after, resulting in 4 separate overdraft fees."
Of course your bank will deny doing this on purpose, and simply state that these charges are "pending" and they just "happened" to post in that order. Funny luck, eh?
Last year banks made approximately 38 billion dollars on Overdraft Fees!!
Since it's not a "loan" banks are not required to disclose APR's for these charges. That's ok, it's not difficult to figure out. Banks generally fight against the Payday Loan industry because we offer an alternative to multiple NSF fees when you're short on cash, and we are a threat to banks' 38 billion a year overdraft fee market. They claim our APR%'s are too high, and lenders like Pay1Day.com should be banned or limited even more. Interesting enough, when one calculates the average Overdraft situation to be much higher (APR).
If you overdraft your account by $10 and are charged a fee of $30…
(($30/$10) * (365 days/14 days))*100 = APR% of 7821%!!!!!!!!
Wow! That's much higher than a lot higher payday advance loan! What about when you get hit with multiple charges?
Lets imagine getting hit with 3 NSF's ($30 apiece) and say you only over drafted by $20 total….
(($90/$20) * (365 days/14 days))*100 = APR of 11,732%!!!!!!!!
No wonder banks refused to tell their customers what the APR% of their last overdraft was. Now as a reader, don't you want to think twice the next time big banks are claiming that direct payday loans APR's are "too high"!