Subprime lenders have suffered greatly for hurting Americans most financially vulnerable during the latest banking crisis. They are however back in a new form which can be just as dangerous thanks to online installment loans. Loans allow Americans with less than perfect credit to borrow money over a relatively long period of time with astronomical interest rates. They are attractive to the middle class who have big bills to pay and who want to get by.

But the consequences of these loans on the American working class are staggering. Bloomberg reported that subprime borrowers owe $ 50 billion in these types of loans. As household income grows, it grows much more slowly than the costs borne by the middle class. Home prices have risen faster, health care has risen faster, and every purchase, like owning a car or renting a car, puts consumers into more debt. Americans borrowed far more than they earned. While interest rates have fallen dramatically, middle-class consumers aren’t always the ones to benefit, as the rates are only for Americans with great credit.

The interest rates for online installment loans are generally two to three times higher than the rates for home mortgages in the news. With online loan companies in the market, access is also to be taken as the working class cannot walk into a bank and get short term loans when they are in trouble.

These loans are one of the answers to the question of why Americans have saved so little, even when the number of jobs is at its lowest. Families are falling into debt and government regulations have not moved quickly enough to stop the uptrend. Alternative credit providers are the winners because online installment loans are dragging people down. It could be even worse this time around, as loans have longer cycles – up to five years, giving consumers plenty of time to pay off a loan that cripples their savings and possibly their credit rating.

What can banks do? Banks can try to talk to customers about better options. For example, a home equity line of credit will usually have a higher interest rate than a home equity loan, compared to an online installment loan it is extraordinarily low. Even a bridging loan from a bank will undoubtedly save the consumer thousands of dollars over the life of the loan. Finally, banks must advocate for comparable regulations on monitoring these new alternative sources of credit.

Politicians may continue to designate banks as one of their favorite punching bags, but they are often behind when it comes to regulating real sharks.