High street banks may follow US payday lending trend

While traditional banking institutions in the UK have been losing ground recently with an increasing number of Brits turning to instant cash loan providers for short term credit, US banking giants have been making in-roads into the payday advance lending industry – and some financial experts believe that the practice may make its way across the pond.

Taking out short term loans from payday lenders can be an expensive option, but sometimes they are the only ones available to those facing a financial emergency without access to credit from a high street bank.  With the economy in the state that it is, alternative lenders such as instant cash loan providers have grown by leaps and bounds while access to credit through traditional lenders has all but dried up.

However, some banks in the US have begun to reach out to those in need with their own brand of payday lending services in order to get payday lenders to relinquish some of their market share.  The fees these banks charge for the service is relatively comparable to an independent payday lender, making them competitive – though services such as credit unions are still much less expensive when it comes to taking out loans in the shorter-term.

Industry experts in the UK have expressed concerns that the practice may spread across the pond much in the same way that no win no fee legal claims have, with high street banks at home offering their own versions of payday lending services in order to remain competitive against firms such as Wonga.com and Cash Converters.

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