The Cash Advance Trap
The ads make pay day loans appear easy: You spend a fee, you can get the money, and you repay it along with your next paycheck. You either keep a postdated check or your checking information using the lender, and so the lender relates to the collection. Whenever your loan’s term (generally speaking one month or less) expires, the payday lender cashes your postdated check or brings the funds straight from your own bank checking account.
But that process hides a trap: If for example the account does not hold sufficient to repay the mortgage, you’ll begin accumulating interest costs and charges. The upfront charges alone generally work away to rates of interest of 650-1000%. [Read more...]