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- US banking laws allow banks to transact business outside of their state.
- Storefront payday lending is a regulated activity in Kentucky.
- Kentucky considers Internet payday lending illegal.
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Can Think Cash do business in the state of Kentucky legally?
Can Think Cash do business in the state of Kentucky legally?
Payday loans, also called "cash advance loans," "check advance loans," or "deferred deposit check loans," are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. The borrower will give the lender a post-dated check, which the lender later uses to electronically transfer a payment or the entire balance of the loan from the borrowers account. If the payday loan is transacted on the Internet, the borrower gives the payday lender authorization to access the borrower’s checking account via the ACH system.
I have no love for payday lenders in general, or banks offering Internet payday loans in particular.
US banking laws allow banks to transact business outside of their state and use the banking rules and laws that apply in the bank’s home state. That is how people residing in states that outlaw payday loans find these loans.
First Bank of Delaware, a relatively small bank based in Delaware, operates a payday loan business online under the ThinkCash brand name. According to the bank’s 2009 10-K statement, it has no physical presence outside of Delaware. It is a state-charted, and not a nationally charted "NA" bank.
Storefront payday lending is a regulated activity in Kentucky. It is, therefore, legal if the payday lender follows Kentucky law.
Your Question
Your question asks me to make a conclusion regarding the legality of a bank operating in Kentucky. States cannot regulate nationally chartered banks. However, I cannot see how a state can regulate the online activity of a state bank that has no physical presence in the local jurisdiction. However, the Kentucky Department of Financial Institutions FAQ page reads in part, "Internet payday lenders are not regulated in the state of Kentucky and are therefore illegal."
The Kentucky Department of Financial Institutions considers ThinkCash’s lending is illegal if it occurs in Kentucky. However, I am curious to learn how Kentucky enforces this ban, given the ephemeral nature of the Internet.
If you are considering a payday loan, whether through a storefront payday lender or otherwise, I urge you to consider a short-term loan alternative.
I hope this information helps you Find. Learn & Save.
Best,
Bill
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Dealing with debt
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q1 2024 was $17.69 trillion. Auto loan debt was $1.62 trillion and credit card was $1.12 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in North Dakota, 16% have any kind of debt in collections and the median debt in collections is $1866. Medical debt is common and 7% have that in collections. The median medical debt in collections is $629.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.
