Times are tougher than ever for allot of families these days. Some households are losing their main breadwinner because of layoffs and job cuts. As a result payday loans are getting more and more business. When money runs out, there are still bills to be paid and mouths to feed. Turn on your television or radio and payday loans advertisements are everywhere. Though payday loans may seem to be just what the doctor ordered, they actually cause more harm than good.
#1 Reason to stay away from payday loans| Excessive Fees
If you are experiencing a financial hardship, you may not pay great attention to the fine print. Payday loan lenders capitalize on this. The lenders make the availability of the instant payday loan very appealing. If you are struggling to keep your lights on and don't have a dime insight, the statement "money is deposited with 24 hours...NO credit check" sounds very appealing. What the payday loan lenders do NOT focus on is the high fees associated with these loans. Most payday loans are accompanied by a $10 to $100 weekly fee. This can add up to almost a %400 percent interest rate. Now tell me, no matter what your financial hardship is, is it worth 400% interest?
#2 Reason to stay away from payday loans | You Dig a Deeper Hole For Yourself
If you have a financial hardship that requires a $700 loan, you will be responsible for paying back at least $800 out of your next paycheck. If you are already between a rock and a hard place, how are you planning to bounce back from that? The fact that a financial hardship has you considering a payday loan indicates several things:
Potentially low credit score
Lack of emergency savings
Lack of resources when in an emergency
All of the above are even bigger reasons to avoid a payday loan. If you experience yet another financial hardship and you have over extended yourself with a payday loan, how will you bounce back from that?
#3 Reason to stay away from Payday Loans | There are several other options
If the above reasons were not enough to deter you, lawmakers and government officials have also started taking special interest in the detrimental effects of payday loans. While there have not been any laws issued regarding payday loans, the following alternatives have been suggested:
Taking out a loan from a family member or friend
Taking a small personal loan with a credit union
Taking a cash advance against a credit card
As a final resort using overdraft privileges against your checking account (at least the fees are not as high if this is not abused)
Learn to make financially wise decisions. Stay away from payday loans at all costs.
