With all the bad press and legislation aimed at making payday lending illegal, it’s amazing there are so many still in business. The reason for this is simple: it’s a quick way to get cash. Payday loans can be approved within a matter of hours and usually don’t require a credit check. They’re appealing to many people until they realize how expensive they really are. Here are six reasons to steer clear of payday loans:
1. Payday loans are incredibly expensive. The interest rates are nearly 10 times more than what you’d pay on a credit card.
2. You can get stuck in a repeat cycle. Some lending operations try to prevent this from happening, but usually people get payday loans to pay off old payday loans.
3. Debt grows fast at these rates. You could end up paying up to 10 times the amount you originally borrowed.
4. Payday loans are too easy. Unlike other loans, it takes no time to apply for a payday loan.
5. Many payday loan companies require access to your bank account. This allows them to just take the money straight from your account. This can easily lead to overdraft fees if you’re having trouble paying back the payday loans.
6. The day you realize you owe more than you can repay can be unpleasant. However, the Fair Debt Collection Practices Act should protect you from harassing debt collectors.
For more information about payday loans, visit Fox Business.