Discover more from Advocate Andy
A Rogue Bank and a Payday Predator Create the Elastic Line of Credit
Elastic is one of several schemes by Elevate Credit to prey on low-income victims
Republic Bank and Trust of Kentucky and Elevate Credit came together to create a line of credit product targeted to operate a lot like a long-term payday loan. The product? The Elastic Line of Credit.
One company offering a line of credit “solution” to emergency expenses or savings shortfalls is Elastic (in partnership with Republic Bank out of Kentucky).
Here’s how they describe the Elastic Line of Credit:
Elastic is the easy way to access money when you need it. Once your Elastic Account is open and activated, you can access money whenever the need arises.
They note that credit lines are available from $500 to $4500. Each time you take an advance, you pay a fee of between 5% and 10% of the amount requested.
Then, you pay a “carried balance fee” for each month you carry a balance.
Here’s an example: If you took out a $1000 line of credit and maintained a balance at or near $1000 (by borrowing smaller amounts every couple of months, for example) — you’d end up paying more than 100% APR in fees/interest over the period of 12 months. That means you are paying $2000 to have access to $1000. Or you’re essentially doubling the cost of everything you purchase. Now that’s some serious inflation.
Elastic is counting on you NOT paying back your small loan in full at the end of a month. They know that if you had trouble meeting one small expense, you’ll likely need to borrow again just to keep up with the payments. It’s not like some extra cash will just magically appear to make your budget work.
Oh, and Elastic is a subsidiary of super-sketchy Elevate Credit.
MORE on Elevate:
Loans with rates as high as 251%.
Read that again.
No, this is NOT the shady payday lending store located in a crappy strip mall.
Instead, it’s a so-called “FinTech” lender named Elevate. The company operates a number of branded credit products — short-term or installment loans offered entirely online.
These products include Rise, Elastic, and the Today card Mastercard.
Here’s how the Dallas Business Journal describes one recent settlement involving Elevate and a scheme to evade state caps on short-term loan interest rates:
Fort Worth technology-based financial lender Elevate Credit has agreed to pay $33 million as part of a proposed settlement agreement related to a web of litigation across the United States, which alleged a decade-long scheme of predatory lending and subsequent corporate transactional legal maneuvering that victimized more than a million low-income people.
Buy Now, Regret Later?
More than 45% of Americans have now signed up for at least one Buy Now Pay Later plan. That’s compared to 31% as of April 2021 — a 41% increase in usage over 10 months. Of those who’ve used the plans, 22% regret their decision, saying they wish they’d never signed up for a plan at all.
More than 50% of respondents have been paying off multiple Buy Now Pay Later plans at one time.
Besides Elevate’s partners at Republic Bank, who are the other “bad news banks?”
Consumer advocates are aware of “six rogue banks fronting for high-cost non-bank consumer lenders, enabling loans up to 225% APR that are illegal for the non-bank lender to make directly.” Four of the banks are chartered in Utah: FinWise Bank, Capital Community Bank, First Electronic Bank and Transportation Alliance Bank (TAB Bank). The letter also cites Republic Bank & Trust of Kentucky and Lead Bank of Missouri. The high-cost lenders using banks to launder their loans include EasyPay Finance, Elevate Credit, OppLoans, the installment loan brand of the payday lender CashNetUSA, and the auto title lender LoanMart, among others.