Payday loans and wide possibilities.
There are so many possibilities of how you can use payday loans to your advantage. One of those ways is that the loan can be used to stay away from credit card debt. Many of us find ourselves falling short of credit card payments and accumulating debt. But if we use a little common sense, we can get away very easily from falling prey to such debt.
What usually happens is that credit cards give us an option not to pay the full amount on the payment due date; we think that it is a great help and unknowingly hurt ourselves. What we actually are doing is accumulating more debt and making it easy for credit card companies eat up our money as interest. This is not a good way to manage our finances. We should definitely curb the urge to do this and take all positive steps to keep away from credit card debt.
Set the rule
To start with, make a promise that you will make your credit card bill payments like clockwork, before the payments’ due date, never late. Also make sure that no matter what, you will not let your credit card company take a penny more than what is absolutely necessary, even if you have to borrow from others to meet that commitment. Well, you might be thinking, if it was so easy to borrow, you would not be using credit cards. Come on; do not get discouraged, I can let you into the small secret I use to get over the borrowing difficulties.
Easiest way out:
It is actually one of the simplest and easiest ways to borrow money for your needs. If you have not already guessed it, yes, I am getting at using payday loans for this. Think about it. You are only short of a few bucks in paying the full balance of what you owe to the credit card company. When you do not have that money, what usually happens is, instead of paying the full balance, you end up paying only the minimum that the company wants you to make.
Assert Yourself:
This is one habit we have to get out of as quickly as possible. When you find you will not be able to meet the full payment for your credit card bill, get a cash advance that is given as a loan on your own income, to overcome the payment issue. Now you know you will not be getting your whole income next month, because you will pay back the cash advance, so you will get control over your spending.
The added advantage is that this all will subconsciously play on your mind whenever you think about using your credit card and you should be deterred from using it. But what if today is the last day I can make a payment on my credit card without having a late charge? Don’t worry but act fast. Once you apply for your payday loan and if you pass approval, which takes only a few minutes, you will usually have the money transferred to your bank within two hours. The beauty of getting such loans is that you do not have to undergo any credit checks or faxing to obtain one.
So next time, when you fall short of your credit card payment, think of using payday loans to overcome it.
I don’t recommend using a pay day loan for paying a credit card bill. All you would be doing is moving debt around. Payday loans have some of the highest loan rates, anyone dumb enough to use a payday loan to pay a credit card probably has other problems they need to take care of.
HS
Typically, it cost $20 for every $100 borrowed through a payday loan (short-term loan, usually two weeks, which comes to about an APR of 480%, although some consumer groups put the typical APR at about 360%). So, if you thought your credit card interest rate of 18%, 29% or 39% was bad, try dealing with a 360% APR. Yikes!
About 75% of people who take out payday loans have to renew (revolve) their loan, which cost them more. Some states passed laws limiting payday lenders and some payday lenders have closed down operations in some of these states.
HS has a point – getting out of the credit card burden is best done through proper budgeting and planning, and changing your financial habits so that you eliminate wasteful spending. (If only Congress took some hints…) I think what the author meant was more along the lines of taking care of a sudden gap due to an unexpected expense – and that the fees from a payday loan would be less than for a late payment, which would be true.
Perky on Payday,
I can see your point. $20 or $30 fee on $100 is less than the $29 to $39 late fee a credit card company will charge (not to mention the resulting default interest rate, which will jump to as high as a 39.99% APR just for being late once). However, if the cardholder has to borrow $200 from a payday lender, then the cost doubles and it hardly becomes worth it (unless they just want to avoid the APR hike, which may or may not already be in effect if finances are that tight).
The other issue is that if a cardholder is at the point to where they cannot make their credit card payments, then taking a payday loan will likely not help in any way. First of all, it’s another loan that has to be repaid. Paying debt with debt just increases debt — deepening the hole debt digs for consumers. So, the $200 borrowed is will be gone from the next paycheck and that’s $200 they can’t use to pay the next credit card bill. It’s a cycle that can easily spiral out of control.
Secondly, if someone is faced with having to take loans from payday lenders to pay credit card issuers, then that someone should (as you rightly suggested) take a real close look at his/her budget and see if there is anywhere they can cut. The could also talk to their credit card company (who are traditionally not interested in cardholders’ financial problems, just payments, but who have recently softened up in response to their mounting losses as a result of cardholders’ financial problems).
Thirdly, if the budget doesn’t have any room (or enough room) to make a difference, then it’s time to seek professional help with your debt. Credit counseling may help, but if you can’t afford their debt management plan there is also debt settlement (just do your homework before enrolling with a debt settlement company or get a do-it-yourself debt settlement kit so that you can settle your own debts). At a last resort, there’s always bankruptcy (as unpleasant as it is, it is still an option), just be sure to speak with an attorney licensed to practice law in your state and who is experienced in bankruptcy law.
If someone wants to know more about payday loans, they should search for “Center for Responsible Lending” and read their information on payday lending. It’s a real eye-opener.