Never Use Payday Loans

Must I Ever Use a Payday Loan Company? 

Previously several years, payday loan stores have now been popping up all over the country tumbshots . With names like "Check Into Cash," "The Cash Store," and "EZ Money," they give unsophisticated people the promise of rapid, easy cash with few questions asked. But at what cost? 

The High Price of Easy Money 

Americans paid a lot more than $6 million in pay day loan costs in 2005, and the amount is likely to be higher if the results for 2006 are tabulated. Payday lending is a big business, and it is also among the fastest growing in the nation. EZCorp, as an example, was a lowly Texas-based pawnbroker just a couple of years back. Thanks to expanding in to the payday loans business in 2002, the company has more than quintupled its profits, and its share had the most effective one-year price performance of any company traded on the major exchanges or NASDAQ, through June, 2006. 

While buying EZCorp's investment this past year might have been a wise economic decision, actually utilizing the company's services has never been recommended. Organizations and the reason EZCorp like because their customers are ripped off by them so much money is it make, and this really is rarely a matter of opinion. Based on EZCorp's 2006 report for shareholders, the common pay day loan comes with an annual percentage rate (APR) of 530 percent - and that's not really a typo - that's highway robbery TM . Why would anyone ever use a pay day loan company? 

Target Market - The Unsophisticated and Credit Limited Consumer 

A lot of the payday loan business's customers are those who are unsophisticated and / or have made bad choices using their credit previously. These are individuals with no credit and no savings, who stay check-to-check. They do not understand that when they accept pay a price for a, two-week loan, they are paying a substantial annual interest rate. Or in some cases, they only don't care - they feel that they've no other available choices. 

Payday loan services are used by a disturbingly large percentage of people to be able to avoid incurring NSF (non-sufficient funds) charges with their banks. People living check-to-check, with no use of mainstream credit, could be ruined by unexpected expenses. Imagine an individual mother who needs to write a $200 always check to get her car fixed in order to get the following day to work, but she does not have the $200 in her bank account. She writes the check and then immediately visits the cash advance store, where she can often borrow the $200 with nothing beyond affirmation of her job with a recent check stub. In this case, the single mom might actually be building a wise decision - since NSF fees are said to have an of 665 percent, and bank overdraft fees are also higher, at 1,160 percent APR. Demonstrably, the system is loaded against those that need probably the most support. 

The Period of Indentured Servitude - And Steer Clear Of It 

In the worst cases, people find yourself working all week in order to pay back their payday loan, and then have to remove another payday loan in order to make ends meet. Hence, the pattern continues, and these regrettable people are directed to the current exact carbon copy of indentured servitude. 

The best way to stop this from happening for you is to always maintain sufficient lines of credit. In the above case, if the person might have only charged the $200 repair bill on her Visa or Mastercard, all would have been well. Utilizing a charge card to automatically pay for your regularly occurring charges, such as your phone and cable costs, is a great way to avoid NSF or bank overdraft expenses, as well. 

If you discover yourself in some trouble, be certain to always pay the minimum due on your own bank cards - make this a priority second simply to success. If you default in your credit cards, you could have an extremely difficult time getting credit again in the future. Avoid the problems of the payday loan client, and of course, avoid the payday loan stores. Your money should really be employed for your personal advantage, to not the important thing of illegal companies that make profits for their investors by using poor people follow us on twitter . 

Be Mindful, 

David