You've heard it many times before: "I'm on my last few dollars", "I'm living paycheck to paycheck"; however, few of us are aware of what it's really like to live from paycheck to paycheck. We are blind to the fact that there is a booming industry capitalizing on the plight of poor Americans; the Payday Loans (or Cash Advance) industry.
The basic concept behind payday loans is that a cash advance company will loan out a small, short-term loan to you and you will have to pay back the loan with interest on payday. For example, John receives a cash advance of $500 on Monday and agrees to pay the payday loan company $550 on payday. However, what the company fails to mention is that the interest payments amount to annual interest rate of over 500%!
These rates may seem outlandish, possibly on the brink of illegality, but this is not the case. These businesses are both legal and highly profitable. This past Christmas, there were tens of millions of people who had taken a payday loan to pay for various expenses including gifts, ornaments, Christmas trees, Christmas dinner and more. Furthermore, more of these cash advance outlets are sprouting up both in the online and bricks-and-mortar world. This tremendous growth is due to the fact that the low-wage, low-income job sector is on the rise. With the rise in low-income families comes the rise of the payday loan industry.
To the defense of the payday loan industry, there are potential benefits to this type of lending. First, borrowing from these businesses is much safer than dealing with a loan shark. (who can come after you with his goons). Secondly, these loans may end up costing you less than the charge for a bounced check and/or late fees from your local bank. Lastly, interest rates that credit card companies charge on missing payments could end up costing you more in the long run.
Although payday loans may have sky-high interest rates, they are very useful when you are in dire need of cash in a short amount of time. So if they're about to turn your lights off tomorrow, you may want to contact a payday loan officer. However, if you're just in the mood to go on a $500 shopping spree; be patient and before you know it your [pay] day will arrive.
To learn more about advances, follow this link:
Cash Advance (if the link does not appear, please go to http://www.paydayperks.com)
John Kim is an expert in the study of finance and finance related topics. To read more about payday loans, please visit
Payday Loans
