Payday loans, also called “cash advance loans,” are small, short-term loans that carry very high interest rate. Some companies have even begun to advertise them as loans to help you repair your credit, but this is very misleading. They suggest that these loans can help you pay off your bills and so establish good credit, but if you cannot afford to pay your payday loans on time, you have to “roll-over” or extend the loan - often at huge expense and interest. Many people get into a payday loans cycle, whereby much of their monthly paycheck goes towards paying off their ever-growing payday loans.

It seems as if the storefronts offering these dangerous loans have sprung up overnight on many street corners. They’re also advertising on TV, billboards and elsewhere. They make it so easy to get that extra few hundred dollars to tide you over when money is tight.

Don’t fall for the pitch. If you can’t afford to pay all your bills one month, you are much better off trying to arrange an alternate payment schedule with your creditors instead of risking your credit rating with a cash advance loan. Payday loans may be fine in a true emergency, but the payday loans cycle gets very unaffordable very fast and can ruin your credit rating.

This entry was posted on Wednesday, August 9th, 2006 at 11:53 pm and is filed under Debt Reduction, Debt. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.