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Understanding Check Cashing and Payday Loans
Don't let a payday loan trap you!
It may seem easy and convenient to use check cashing stores and payday loans near you, however the costs involved can add up quickly, and soon can make life very difficult for you. See what’s really involved with check cashing and payday loans and consider your alternatives.
Check cashers:
- Charge high fees— up to 5 percent of the check amount for example it would cost you 12.50 to cash a $250 check; and usually it costs $3 for a money order. Average fees for users are more than $800 a year!
- Are not open all the time (like ATMs).
- Usually can only offer cash (and not a debit card). Cash isn’t as safe as a card and there’s very little you can do if your money is stolen or lost.
Payday Loans:
Pay day loans are usually made to people who are desperate, need money right away, and plan to pay it back with their next paycheck. Lenders usually offer amounts up to $500 for short periods of time such as one to four weeks.
Loan fees range between $15 and $70, depending on the loan amount. If you don’t pay off the loan within the agreed amount of time, the lender renews the loan and adds on late fees. Over 90% of payday borrowers end up paying more than the initial fees. The Center for Responsible Lending found that the average payday borrower ends up paying over $700 for a $325 loan!
Also, payday loans aren't considered real loans, so no matter when you pay them off, they don't help you build a credit history. Without a credit history it is difficult to get a loan from a bank, get a credit card, or buy a car.
If you see an item that’s on sale and you think it’s a great deal, but you need a payday loan to pay for it you might be better off saving up for it over time, or looking for a similar but less expensive item on Craigslist or Freecycle.
Thanks for this article. As a loaner, we should be responsible enough and understand the nature of the transaction we are taking part. We should be very careful and wise in dealing. Don’t forget you rights and responsibilities of course. There is news that says that our economy is growing little by little. Obviously, it’s a clear manifestation of that we should not expect that the economy would grow rapidly. Great economic recession is experienced in every part of the globe. Many are hit hard reason for loosing their job, their homes, food shortage and many students stopped from college. The rise and fall of the economy will never be changed abruptly. According to the study of Oxford and Vanderbilt University scholars, lenders make modest profits and high costs, and that the profitability of the industry is far below the banking and credit card industry.
Because of the demand of our necessities we are just even bothering on how just to get in into the loan, but there are loans that they are just a scam that because of what they used to be, just be careful when you involved. If you need payday loans, you’ve got reputable sites like PersonalMoneyStore.com to go. If you need credit counseling or debt consolidation, there are reliable companies out there that can help, and even websites that can help you restore a good credit report on your own. However, there are a lot of scams out there, new and old, to watch out for in 2009. The credit crunch is causing people to pose as credit counselors and prey on people trying to get out of debt. Many have fallen victim to con artists, frauds and scammers. It’s important that you know how to protect yourself from this ruthless doing. For example, if anyone asks you to pay debt-relief service fees upfront, without doing any work for you first, run! Also if someone is offering you payday loans, but you haven’t been approved yet, and they ask you to pay a fee, it is most likely a con. If you get offered a “job” saying you can work from home, but you must first pay for instructions or contact lists, don’t buy it. I recommend you read this article I found that talks about overpayment scams, and to learn more about how payday loans can help instead of hurt.