There are times when even the most well-planned budget faces the unexpected. When there’s more month than money, it’s important to plan your next moves carefully. However, too many families turn to payday loans. We’ve put together reasons why those loans can be dangerous for your financial future and what you can do to make ends meet (even if it might take a bit longer than you’d like).
Payday Loans Charge a Lot to Borrow Their Money: Payday lenders make money by charging a fee for every $100 borrowed. This can range from $15 to $30, which means you’re paying anywhere from 15 to 30% interest on the money you are borrowing. That’s not a good deal. But it gets worse. Do the math and you’ll see that it adds up to a 390% annual interest rate. That’s a terrible deal.
Watch Out for Even More Fees: Let’s say you cannot pay back the payday loan within 30 days. You’ll be required to pay a renewal fee, which can be even more than the initial cost to borrow. This can quickly spiral out of control, adding to your debt amid ever-rising fees.
There are More Affordable Options: Even using a credit card with a cash advance can be less expensive and less dangerous than a payday loan. Additionally, a Home Equity Line of Credit from InRoads may be a great way to cover emergencies or consolidate debt into a more affordable payment, leaving you with some extra cash for unexpected expenses.