Finances and Your Options

Payday Loan Facts

You have probably seen the ads on the radio, television and the internet. You may have even received ads in the mail. They refer to payday loans, which can come at a high price.

If you are not sure that you are ready to take a payday loan, there are other options for you to think about in regards to handling your finances. Payday loans are great given specific circumstances, but taking them out frivolously can be dangerous. If you are having problems with your finances in general, a payday loan will not help you there.

Check cashers, finance companies, and others are making small, short-term, high-rate loans that go by a variety of names: payday loan, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.

Typically this loan involves a borrower writing a personal, post-dated, check to the lender for the amount he/she wishes to borrow. The company gives the borrower the money minus the fee.

Fees that are charged for payday loans are usually a percentage of the face value of the check or a fee per amount borrowed, for instance for every $50 or $100 loaned. If you happen to extend or rollover the loan, you will pay extra fees for each extension.

Under the Truth in Lending Act, the cost of payday loans – like other types of credit – must be disclosed. Among other information, you must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a yearly basis).

These loans are great for specific circumstances. This would include emergency bills that are otherwise going to be charged late fees or to prevent certain services from being turned off.

Perhaps you are going to be charged huge late fees to a creditor if you don’t make your next payment. But this next payment falls in-between your paychecks. If this is your situation, then it is wise to know that you can pay the loan back when you get your next payday.

Otherwise, if you are too broke to pay your bills, then you need more financial help that a payday loan can give you. Auto repairs are another situation when a payday loan can help. But unlike traditional lenders, payday lenders don’t need to know why you are borrowing the money.

Alternatives to Payday loan

There are other options. Consider the possibilities before choosing a payday loan:

When you need credit, shop carefully. Compare offers. Look for the credit offer with the lowest APR – consider a small loan from your credit union or small loan company, an advance on pay from your employer, or a loan from family or friends.

A cash advance on a credit card also may be a possibility, but it may have a higher interest rate than your other sources of funds: find out the terms before you decide. Also, a local community-based organization may make small business loans to individuals.

Compare the APR and the finance charge (which includes loan fees, interest and other types of credit costs) of credit offers to get the lowest cost.

Ask your creditors for more time to pay your bills. Find out what they will charge for that service – as a late charge, an additional finance charge, or a higher interest rate.

Setting a Budget

Make a realistic budget, and figure your monthly and daily expenditures. Avoid unnecessary purchases – even small daily items. Their costs add up.

Also, build some savings – even small deposits can help – to avoid borrowing for emergencies, unexpected expenses or other items. For example, by putting the amount of the fee that would be paid on a typical $300 payday loan in a savings account for six months, you would have extra dollars available. This can give you a buffer against financial emergencies.

Find out if you have, or can get, overdraft protection on your checking account. If you are regularly using most or all of the funds in your account and if you make a mistake in your checking (or savings) account ledger or records, overdraft protection can help protect you from further credit problems. Find out the terms of overdraft protection.

If you need help working out a debt repayment plan with creditors or developing a budget, contact your local consumer credit counseling service. There are non-profit groups in every state that offer credit guidance to consumers.

These services are available at little or no cost. Also, check with your employer, credit union or housing authority for no- or low-cost credit counseling programs.

If you decide you must use a payday loan, borrow only as much as you can afford to pay with your next paycheck and still have enough to make it to the next payday.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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    Credit Counseling

    Finances and Your Financial Future

    Online Credit Counseling

    Living in the US may be an absolute dream come true, but it doesn’t mean that its residents are protected from financial hardships. If you’re a consumer, it doesn’t matter where you live – slipping into debt is much easier than many think. If you’re worried about where you stand, need some help getting prearranged, or are worried about the future – enrolling in free credit counseling can help give you the piece of mind you need. Sure, you can spend hours researching tips and tricks online about how to better manage your finances, but none of this advice is catered to your specific situation.

    Outcome of Credit Counseling

    When taking part in credit counseling services, experienced credit counselors will work with you to decide where you stand, where you’re going, and what to expect. By carefully examining where your money goes each month, you’ll be able to put together a practical budget for your lifestyle. Not only will free consumer credit counseling benefit you now, you’ll get helpful advice that you can put into practice right through your entire life.

    If you’ve already slipped into debt, you may feel absolutely helpless. Even though you may not know where to turn next, there are resources available to people that can help them understand where they stand and give them practical advice about where to go next.

    Debt Management

    Debt management services can not only help you get out of debt but your life will change in many different ways. You’ll better your credit score, end the collection calls, save money on credit card interest, and most importantly – avoid bankruptcy.

    Although the changes you’ll experience are huge, taking the first step isn’t. Enrolling in a debt management program doesn’t put you in a judgmental environment like many debt-stricken consumers fear. Instead, you’ll be working and learning in a safe and accepting environment. Debt management counselors want nothing more than to see you back on the right financial track.

    So whether you’re interested in just better managing your finances or you’d like to end the collection calls once and for all, take the first step to a more secure financial future. Paying off the bills takes money, but the piece of mind you’ll receive after doing so is absolutely priceless.

    Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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      The Failing Economy and Slow Job Growth

      Economists and Economic Predictions

      A panel of economists on Tuesday predicted several more years of pain for the United States, agreeing unemployment will remain high far longer than 2014, when White House and congressional economists have predicted a jobs improvement.

      The panel — including Nobel Prize winner Paul Krugman, Harvard’s Martin Feldstein and Goldman Sachs chief economist Jan Hatzius — agreed that policymakers have failed to adequately stimulate the economy, and that more needs to be done.

      “It’s going to take many years before you get back to anything approaching full unemployment, and 2014 is probably too early,” said Hatzius, speaking at a conference held at the Newseum in Washington. The conference was sponsored by the left-leaning think tank and advocacy group Demos.

      Some on the panel predicted unemployment will tick upward before it heads lower. And Feldstein predicted that housing prices could fall even further, especially as more underwater homeowners give the banks the keys to their homes, increasing the supply of available ones.

      “When that happens, it hurts consumer confidence and it makes it much harder for people to move where the jobs are,” Feldstein said. “Then, I think (consumers) have to stay and suffer it out, and can’t move where they have a better chance of getting a job.”

      They talked about how the sputtering U.S. recovery compared with the long recession that Japan suffered through in the 1990s.

      “In fact, we’re not doing what the Japanese did, we’re doing it worse,” Krugman said, pointing out that the United States has a larger trade gap, a bigger surge in unemployment and is more quickly facing an exhaustion of the political will to act. “In the long run, we’re going to look at Japan’s lost decade as a success story compared to what we’re going through.”

      Federal Reserve Board

      The economists also suggested that the Federal Reserve Board could do more by buying government debt or other investments. The Federal Open Market Committee meets on Nov. 3 to discuss potential actions that could help the economy.

      But the panel predicted the Fed won’t have the will to take “risks” and buy enough Treasurys to make much of an impact on the economy.

      “The numbers needed to really move the needle a lot are very, very large, and there will be a natural bias toward caution,” predicted Hatzius.

      The group also debated tax policy as a means of fiscal stimulus. Feldstein talked about the importance for Congress to extend tax cuts before the end of the year, when 2001 and 2003 era tax cuts are slated to expire.

      “This is not the time for a tax increase,” said Feldstein, who said that doing nothing to extend tax cuts “seems like a disaster scenario.”

      Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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