Prepaid Debit Cards On Advance America Agenda
The nation's biggest payday lender, Advance America, will begin selling prepaid debit cards within the next few months, according to the chain's president, Ken Compton.
Based in Spartanburg, S.C., the company hopes to offer the prepaid debit card at 200 store locations by the end of September, and at as many as 2,000 stores by the end of the calendar year.
Critics of the company and the payday cash loan industry as a whole said the card is just another way to prey on consumers. Packaging high interest loans in the form of a debit card, rather than a post-dated check, the company can skirt laws recently enacted to limit exorbitant interest.
Advance American has been shut down or limited in many states, and is searching for new legal ways to make its payday loans, The Spartanburg Herald-Journal reports.
The company recently released its earnings for the second fiscal quarter, and while revenue increased overall, it took a hit in many of its big markets. Payday loans were banned in North Carolina altogether, and recent regulations in Illinois, Pennsylvania, Arkansas and Indiana have adversely impacted earnings.
With interest rate caps affecting the profitability of its loans, Advance America is reeling from declining stock price and looking to repackage its products to regain traction. It is sure to meet serious opposition from some consumer groups if it proceeds.