Credit Secrets & Tips Blog

“Cash Advance” loan, often called “payday loan” comes with extremely high price.
Here is how it works: let’s say you wrote a $330 personal check to borrow $300 up to 14 days. The lender would agree to hold check until next payday. 

In this example, the cost of initial loan is $30 and interest rate for 14 days is 10% (=30/300), So APR is 260.7% (=10% * 365/14)!

Now multiply 260.7% by the $300 loan, 2.607 * 330 = $860.31.  That is total interest charges you pay for in one year. If you add this charge to the original loan amount $330:
$330 + 860.31 = 1190.31.  That is way TOO MUCH!

If you find yourself need extra cash from the lender, consider these possibilities as alternatives to the payday loan:

1.  When you need credit, shop carefully.

2.  Compare the APR and finance charge (which includes loan fee, interest and
other types of credit cost) of credit offer to get the lowest cost.

3.  Ask your creditor for more time to pay your bills. 

4.  Make a realistic budget, and figure your monthly and daily expenditures.

5.  Find out if you have, or can get, overdraft protection on your checking account. 

6.  Contact with your local credit counseling service, if you need help working out
a debt repayment plan with creditor. 

If you cannot avoid taking out a payday loan, borrow only as much as you can afford
to pay back. Payday loan roll-overs can lead to a vicious cycle unending debt. 
It could turn your temporary setback into major financial crisis.