There have always been differences between traditional financial services institutions such as, banks and the cash advance industry. The payday advance industry came about due to banks and credit unions being unable to meet the needs of all consumers. Many consumers were simply ignored by these financial institutions, thus the payday industry met their unfulfilled needs.
The payday loan industry met the needs of consumers who wanted short-term personal loans quickly. The fast cash loan is a short-term unsecured personal loan which is meant to be paid back by the consumers’ next payday. A cash advance is a short-term solution to an emergency. Consumers seek the loans to cover unforeseen expenses such as, medical emergencies, pay overdue bills, late bill payment penalties, pay overdraft protection fees, or other short-term obligations.
Since the personal loans started attracting borrowers in the 1990s, the fast cash loans have taken off in popularity. The industry has grown by leaps and bounds in the last two decades. In recent years, the industry has made billions in loans to borrowers. Taking the cue from the success of the loan industry, banks and credit unions are scrambling to find ways to offer similar types of services.
However, the traditional financial institutions have so far been unable to duplicate the services provided by the payday loan industry. It may be that the payday lenders are adopting some of the services offered by banks, an evolution within the industry.
Many lenders have become one stop locations for newly added financial services, providing check cashing, tax preparation services, bill payments, phone cards, prepaid debit, wire transfers, and money orders. The lenders have built on the ease and convenience of payday loans to offer the choice of flexibility to consumers. Some consumers visit these one stop locations not for personal loans but for the new alternative services. The lenders provide alternative services online as well, which include online payday loans, faxless payday advance, and no fax cash advance.
These hybrid locations are popularly called Financial Service Centers (FSC), now numbering over thirteen thousand locations in the United States alone. A FSC is neither a bank, credit union, nor a payday loan lender limited by the exclusive, but separate traits of either industry, the FSC industry is composed of hybrid short-term loan merchants, offering a host of alternative financial services normally offered by payday lenders, with credit and saving plans associated with credit unions and banks.
The FSC continue the tradition of offering existing and new consumers with cash advance payday loans in conjunction with the new offerings. FSC’s have introduced new programs to help them compete with banks like never before. Now consumers have the opportunity to open a savings account associated to a prepaid debit card which possesses no fees, offers interest, and federal insurance protection. Also, the Credit Building Initiative will give customers an opportunity to build up a credit file based on utility, rent, and other frequent payments, thus helping access credit products easier. In addition, the most important part of the new initiatives by the FSC industry is the financial literacy program to educate consumers about sound financial and credit decision making.