In the midst of a financial crisis and a failing economy, payday lenders are fighting to stay alive as local, state, and federal regulators try to cap the interest rates these lenders charge consumers for short term payday loans.
The latest in the line of persecuted payday lenders is South Carolina based Advance America Cash Advance Inc.

Advance America Cash Advance claims that it can’t make enough money under the new laws that are being passed to keeps it’s doors open to it’s consumers, effectively driving them out of business like many other payday lenders across the country.

New Law, Old Tactics.

For payday loans stores in New Hampshire, the law that takes place on Thursday, January 2, 2009, and will cap the percentage rates to 36%.

For consumers, 36% may even seem like a high interest rate but the thing to remember here is that the interest rates are calculated on an annual percentage rate basis, so for a one hundred dollar payday loan, a 36% APR would equate to only about $1.38 in total interest charges on a two week payday loan. This is barely over 1% of the total loan value.

Clearly these tactics are aimed at driving these lenders out of business without having to officially ban them.

Next on the Endangered Species List

What Is Fair?

Typically payday loan lenders charge around $20 per $100 borrowed on a two week term. This amounts to an annual percentage rate of about 521%. The new cap reduces revenue per loan almost 1,900% which would be a heavy blow to any business’s bottom line.

The question as to what APR is fair is up to consumers not regulators. If the rates are to high consumers won’t borrow extra cash utilizing these lending services which will force these businesses to find a profitable balance between revenue and market share.

A New Hope For Survival

To stay alive, Advance Cash America Advance is hoping to loan money under other sections of banking law. This would allow the company to charge their usual annual percentage rates without falling under the current restrictions of the new laws passed against payday loan lenders in New Hampshire.

The Pro and Cons of Payday Loan Lending

The battle for and against payday loans has been a continuing battle and a constant struggle for lenders across the country with many states already implementing bans on payday loans.

Why the animosity towards these lenders? Opponents call them predatory and convince the public around them to believe the same with advertising campaigns that draw attention to the perceived high annual percentage rates of 521 percent but in the process fail to explain what the total interest on the loan would actually equate to.

The uneducated public looks at 521% as having to payback over five times the amount of the borrowed loan. It’s no wonder they get outraged and fall towards the opponents side of the payday loan debate.

The Cost Cost of Payday Loan Regulation

Banning and or putting payday loan lenders out of business is really a shame for many reasons. First off we have people losing their jobs in an economy that cannot afford to continue in that direction. Secondly, payday loans offer a service that is unparalleled by any others within the financial industry.

Hundreds of millions of dollars in these loans are given out out to applicants each year proving both their popularity and their worth. Bad business will eventually crucify itself. The fact that these cash advance centers are still open is a testament to the value of their services.

What Makes Payday Loan Lending Valuable to Consumers

Nowhere else can you go today to apply for extra cash and receive it almost immediately after approval.

You can now apply online for payday loans and have funds deposited directly into your account. These loans usually don’t amount to more than $1500 and require minimal criteria for approval making them ideal for individuals with bad credit or no credit at all. The two most important requirements applicants are required to have is a current employment and a checking account for funds to be deposited into.

For life’s little emergencies that demand extra cash, payday loans are hard to beat. For example, if your car breaks down today, how do you get to work tomorrow? Perhaps your short on funds to pay your monthly bills where a payday loan could help you save money by eliminating lay payment fees. Maybe it’s the high scho0l prom this week and you need to purchase your daughters dress, but your short on funds till your next payday. Emergency funds are needed from time to time and that is what makes payday loan lending a valuable service.

There are hundreds of scenarios that could find you benefiting from the use of payday loan services. Be sure to take the time to educate yourself on the payday loan industry before joining forces with payday loan opponents. After all, you may just find yourself in need of payday loans yourself someday.

Credit cards are a very useful and popular financial tool.  Cash advance loans can be, too – if used responsibility.   Maybe too popular as consumer credit spending has become America’s favorite pastime whether we can afford it or not. I won’t give you a bunch of do and don’ts right now about how to carefully and effectively use your credit cards to avoid this cycle of debt, but I will be sure to do so later.

Shopping for Plastic

Oh, curse those fashionable clothes and great deals!

We as consumers are so “plastic crazed”, that I thought I would do a quick article on credit cards themselves.

You see, the credit card industry is so highly competitive for consumers’ business, and we as consumers are so hungry for this plastic money, that much of our credit trouble comes to us before we even make our first purchase, and then we end up having to get cash advance loans to prevent a mountain of interest.

Credit cards as we all know provide us with a revolving loan otherwise known as a credit limit. When applying for a credit card we tend to focus primarily on the credit line or the total cash value that we can charge to the credit card. Unfortunately we must be more diligent with our search criteria because there are a few hidden fees that can cost us a bundle. One in particular will cost us even if we never choose to place a transaction on the card.

Be sure to choose your credit card provider rather than let your card provider choose you. It’s easy to get excited when you get the pre-approved notice in the mail, but this is just a ploy to win your favor by allowing you to think you have been approved so that you walk through the steps of applying.  Don’t do it just yet – you’ll be applying for cash advance loans in no time to pay it off.

When applying for a credit card always be careful to read the terms and conditions of the contract. You may be surprised at what you find there.

Annual Fees

The first thing you should look for is the yearly “Annual Fee” charge. Typically these fees will run from $39 to $99 each year. This is just for having the right to carry the card. Your account balance will begin with the annual fee applied to it for your first year of use.

Remember there are plenty other creditors that would love to have your business, so stay away from those which want to charge you an annual fee.

Interest Rates

You will also want to pay close attention to the interest rates. Interest rates are calculated in terms of APR or Annual Percentage Rates and can vary greatly between providers. The standard interest rates will be around 18 to 24 percent if you’re just beginning to establish credit, and less the longer your relationship with the creditor lasts.

Don’t think however that your creditor will choose to lower your APR by themselves. You may have to call from time to time and make the request. Upon request they will review your account and make a determination.

Cash Advance Loans

The next fee you will want to look for are the cash advance loans fee. This fee refers to the percentage or amount charged to your card whenever you choose to obtain a cash advance from a local ATM machine. This too can vary to some degree and may be of less importance to you if you just tend to charge your purchases straight to the card.

Follow these tips when shopping for your credit card and remember to “spend responsibly”. Credit cards can help you leverage and save your money as well as present you with a host of other benefits such as cash and travel awards, but these benefits are lost if the card is used improperly.

Good Luck! Hope you catch a big limit with small fees.