The Pros and Cons of Payday Loans
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.
Credit Card Applications » Research » Guides » Cardholder Benefits » The Pros and Cons of Payday Loans

The Pros and Cons of Payday Loans

By
Add to Favorites:
Payday loans provide opportunities for people to get their hands on some cash quick should they find themselves in a pinch. However, despite the fact that some online payday loan websites offer better rates than physical payday loan outposts and borrowing via the internet makes it easy to compare rates across several different companies payday loans, overall, are the most expensive way to borrow money. "Calculated as an APR, their costs are higher than any credit card, consumer loan or bank loan," says Eli Lehrer, Vice President of the Heartland Institute, according to the Daily Finance. Proceed With Caution If you are determined to pursue a payday loan, experts make the following recommendations:
  • Calculate, as best you can, the actual amount taking out a payday loan will cost you. The arrangement of fees varies from company to company, and just knowing the upfront fee amount and interest rate does not necessarily mean that you know the whole story. The number you should be concerned with is the totally amount of money you will have to repay.
  • Compare the rates, fees and offering of several different two payday loan companies before choosing one to go with.
  • Research and verify the domain of the website offering payday loan services before filling out any online forms. Make sure that you are providing personal information to only reputable companies with secure sites.
  • Think twice before using any service that has contacted you via unsolicited emails.
  • Prior to borrowing a single penny, establish a realistic payback strategy. The best way to handle the repayment of a payday loan is to pay back the money as quickly as possible because interest accrues at an alarming rate. If you anticipating needing several pay cycles to repay the loan, base your cost comparisons upon the entire life of the loan.
Consider Alternative Options If you find yourself with no cash, no room on your credit cards and none of your friends or family are able to help you out, there may yet be other options rather than taking out a payday loan.
  • Approach your boss and explain your situation. Perhaps you could borrow against a later paycheck.
  • Look into borrowing from a credit union. Some credit unions offer loans similar to payday loans but they are significantly less risky and expensive.
  • Investigate peer-lending services online.
  • Attempt to negotiate with whomever you owe money to. "Many types of 'emergency' costs that lead people to take out payday loans, such as medical bills, can also be paid over time through an agreement with the provider," Lehrer said to the Daily Finance.

Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Credit Card Tips For Holiday Shopping 2016

By Herbert Moore, Posted: November 23, 2016

November and December are the busiest months as gift shopping reaches its peak. People rush around looking for the best gifts and the best deals leaving a lot of money in the shops. Holiday season may force you to go over the household ... Continue reading

Credit Cards to Save More on Holiday Shopping

By Herbert Moore, Posted: November 22, 2016

Discounts and special offers are available all year round. Werther you are a bargain hunter or an impulse buyer, make sure you check online discounts and special offers. Also, if you are a cardholder, see if your credit card opens the door ... Continue reading

How to Get Free Wi-Fi in the Air

By Herbert Moore, Posted: September 28, 2016

Sometimes in-flight Wi-Fi is the bare necessity when you travel abroad or within the country. However not all airlines offer free in-flight Wi-Fi. There is only a couple of airlines that will allow you to use Wi-Fi ... Continue reading