August 10, 2013
Why are payday loans a TERRIBLE idea?
Why are payday loans a TERRIBLE idea?
It is crucial that you repay a payday loan as soon as possible. Many people get into trouble with these types of loans when they are unable to quickly repay the debt. If you can’t repay the loan at the end of the term, you’ll be charged expensive additional fees. It is very costly to be stuck in a payday loan cycle for a long time and can lead to larger financial problems. Payday loans are also much more expensive than other methods of borrowing money. In most cases the annual percentage rate (APR) on a payday loan averages about 400%, but the APR is often as high as 5,000%. A standard credit card has an APR of 12% and a standard loan APR is around 7%. If possible, it is better to use a credit card or tap into your savings in the event of an emergency.
Well put, Macala. You covered the information in very good detail. Here is the bottom line: DO NOT take out payday loans. If you are strapped for cash their are alternatives. Payday loans should not be one of them. RUN AWAY from payday loans!