Banks now offering short term loans

Although consumers looking to involve short term loans in their credit decisions are likely to be accustomed to visiting short term lending stores or websites, big banks are also beginning to offer short-term loans with high interest rates. According to a recently released report by the Center for Responsible Lending, the average bank short term loan's annual percentage rate is 365 percent, based on a loan term of 10 days. The study also found that Social Security recipients comprise one-quarter of borrowers. Short term loans offered by banks are not bound by a federal law that limits their availability to members of the military and their families, and are also not curbed in the 17 states that restrict short term lending, according to Consumer Affairs. Although the direct involvement of financial institutions in the short term lending business is a recent development, they have been indirectly involved for quite a while, Time Moneyland notes. A Consumerist report from 2007 found that seven large short term loan chains were being extensively financed by banks such as Wachovia, JPMorgan Chase and Bank of America.