When an emergency arises and you have poor credit and no savings, it may seem like a payday loan is your only option. But this type of loan can have a negative impact on your credit, savings, and even take you to court. Prepaid debit cards are generally not considered abusive, but they have been criticized for their high fees. In the United States, payday loan operators often set up shop in low-income neighborhoods.
The repayment period for payday loans is usually only two weeks, making it difficult for borrowers to pay them off. According to the Pew Charitable Trust study, 75% of Americans support more regulation of payday loans. Loan rates and terms vary depending on where you live, but there are other options that may be more attractive than a payday loan. Payday loans don't involve credit checks and the borrower's ability to repay debt while still paying their daily expenses is not taken into account.
If you need cash quickly and are sure you can repay the loan with your next paycheck, then a payday loan may be an option. Credit card cash advances are usually offered at an annual percentage rate of 30% or less and are much cheaper than a payday loan. Unlike payday loans, these loans give you a real chance to repay with longer repayment periods, lower interest rates, and installment payments. Payday loans don't take into account the borrower's full financial picture, including their ability to keep up with other financial obligations and living expenses while paying off the loan.
To repay the loan, you can issue the lender a post-dated check with the date of your next payday. Many states now regulate interest rates on payday loans, and many lenders have withdrawn from states that do.
