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Financial Tip of the Day:
Stay Away From “Payday” Loans

Founded in 1951, the National Foundation for Credit Counseling is the largest serving nonprofit financial counseling organization. Find various topics in this blog, including personal finance, credit counseling, housing, budgeting and student loan help. Click here to speak with an NFCC-certified Consumer Credit Counselor.

By Drew Kessler

“Payday” loans are expensive and dangerous.           

You may be tempted to use a payday loan if your weekly budget is especially tight.  After all, it seems like a convenient way to get much-needed cash even if your credit is bad.  Don’t do it! To get a payday loan people usually give the loan company a postdated check for the amount of the loan plus the fees associated with the loan. This looks like a very easy way to get cash to make it to the next paycheck, but what happens if you can’t pay with the next paycheck?  What happens if you find yourself short again? The payday loan company usually adds a number of other fees. You could end up paying as much as 400% interest using payday loans. 

Payday loans can be the first step to serious debt problems.  Part of becoming financially healthy means making some hard choices, so you absolutely need to make good choices. It really is much wiser to make a budget, set up an emergency fund, and stick to your budget. Before you get a payday loan talk to your nearest NFCC Member Agency to see what other alternatives are available.

Drew Kessler is Vice President of Marketing & Communications with the National Foundation for Credit Counseling.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

 

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