Why Payday Advances Can Be Dangerous
21 Jun, 2016 / By Jennifer Hamilton
Payday Advance Loans are advertised as a good way to handle a temporary shortfall right before getting a paycheck. On the surface, these loans appear to offer a vital service enabling hard working men and women to handle expenses while waiting to get paid. However, the interest charged on these loans can easily overwhelm the principal, creating a situation that even a member of the mafia would be too shocked to participate in.
Here are some ways that Payday Advances can be truly dangerous to your fiscal, and mental, health.
High Interest Rates
After the 2008 fiscal collapse, numerous consumer protections were put into place around most forms of credit. This includes topics such as interest rates and payment schedules. Sadly, the lobbying firms hired by payday advance companies were able to excuse themselves from most of these requirements.
They can charge interest rates in excess of any moral or sane expectation, often creating a situation where a person solely exists to pay interest on debt that should have been retired a great deal of time ago.
Much like a criminal syndicate, these companies feel no shame when it comes time to get their money. They can and will embarrass you in front of your colleagues, family members, and friends. They will garnish your paycheck and siphon money out of your checking account, even if it causes you to suddenly owe money to the bank.
These companies do not care; they only want their money, calculated through high interest. Other forms of credit have greater consumer protections – contact your credit union or bank for options before going to one of these modern day loan sharks.
As Addicting As Crack
Once you use one of these companies’ services, you are often thrown into a situation where you are obtaining more loans just to handle your expenses and the interest on previous loans. It starts out simple, pay ten dollars for one hundred dollars next week. Soon, you are paying a grand just to handle groceries.
These companies do not care about your fiscal, or physiological, health. They see you as a source of cash and will milk you for every penny, before trying to collect all of your assets to pay off any principal that would have been retired if you had gone anywhere else a long time ago.
What to do Instead
Contact your bank and see what forms of credit are available. Even a credit card is better than a payday advance loan. At least with a credit card, as long as you have the principal paid off in thirty days there is no interest.
Additionally, check to see if you can arrange payment on certain bills to be pushed back a week or two, so that you can put money back to handle it. Literally anything you can do you should try to do before turning to one of these companies. They only serve to earn money for their stock holders – they could care less about you.