Do banks overcharge?

They advertise some loans at 120 percent annual interest but may charge up to an astronomical 3,650 percent. The loans are available at locations every few blocks. Some consumer groups blast them as taking advantage of the unwary.

That not only describes "payday lenders," whose neon-bright signs and quirky TV ads target the poor with very high-interest loans. It also describes Wells Fargo Bank, U.S. Bank and other mainstream banks, which offer high-interest loans benignly called "deposit advances" or "courtesy overdraft protection."

"I always wondered why it was so important to them that we not mess with" trying to cap interest rates on payday loans, said Linda Hilton, director of the Coalition of Religious Communities and a major opponent of payday lenders.

"I finally realized that some of them are essentially payday lenders themselves," said Hilton, an advocate for the poor. "And even a high interest-rate cap on payday loans might affect some of their business, too."

Hilton for years has unsuccessfully lobbied the Legislature for an interest-rate cap on payday lenders. They charge a median of 521 percent annual interest in Utah, and Hilton sought a cap similar to the 36 percent interest limit that Congress last year imposed on payday loans made to families of military members.

But she said banks were a main opponent to any local payday-loan caps, arguing they might open the door for limiting other types of loans, too, instead of letting the market determine rates.

Banks always prevailed — and Hilton says she can find no legislator interested in pushing a rate cap for now. Banks are among the state's most powerful lobbying groups. They donated at least $147,266 to current legislators in the most recent elections, or about $1 of every $25 that they raised. That averages to more than $1,400 in donations per legislator.

New products

Recently, national consumer groups started noting that banks increasingly are offering some products that have interest as high as payday loans — and, like Hilton, the groups questioned whether that may be why some banks have fought interest-rate caps.

For example, Wells Fargo Bank locally offers "direct deposit advance service," which is nearly identical to what U.S. Bank calls a "checking account advance." Web sites for both banks say loans through those services cost 120 percent annual interest, but it could end up to be much higher, depending on how fast a loan is repaid.