The debate surrounding payday loans in the USA has been going on for years. Many people argue that payday loans are a great option for individuals who need extra cash but cannot get credit elsewhere. On the opposing side lies the argument that outrageous fees make payday loans more of a problem than a solution for individuals in need of quick cash. Both sides of the debate have their merit, but lately it has become evident that one side may be pulling ahead.
Payday loans are available throughout the USA via the internet and payday loan shops, i.e. NowGuaranteed in amounts up to $1000. Generally, a payday loan is given to an individual for a period of 14 days. Once that period has ended, the individual must then pay back the full amount of the loan plus a certain percentage of interest. Most payday loan companies require a 125% repayment – this means that for every $100 you borrow you must repay $125. At this rate, interest and fees can add up to more than 3,000% a year, the factor which fuels the argument that payday loans are dangerous.
New information, however, has revealed that payday loans may not be such a bad option after all. In many cases, payday loan repayment fees are considerably less than the overdraft charges many USA banks would charge. Whereas an individual who overdrew their TSB account by $150 for a period of ten days would be charged $216 in interest and fees, that same individual could have taken out a payday loan for $150 and only be charged the $75 repayment fee. Each bank is different when it comes to charges for unauthorized overdrafts but the truth is clear. Sometimes taking out a payday loan is the better option.
This new information is not to say that one should not think carefully before taking out a payday loan. Depending on the length of the borrowing period and the situation which necessitates securing extra cash, payday loan fees can be more agreeable than the interest and fees charged by banks for an unauthorized overdraft. If you are currently debating whether or not to take out a payday loan to avoid overdraft fees, contact your bank to find out what they would charge and compare it to the fees which would be associated with a payday loan of the same amount. Once you have done a little bit of research you will be able to make an informed decision about which option is best for you.
More info here – http://www.ncdoj.gov/Consumer/Credit-and-Debt/Payday-Loans.aspx