Page 47 - Book4E

CHAPTER 9
Warning: Stay Away from Payday Loans and Check-
Cashing Companies
As discussed in Volume 1, payday loans should be avoided at all costs, especially because of their exorbitant interest rates. But doing so may be increasingly difficult, especially as we see payday loan shops open- ing for business all across town, and their resultant television and radio commercials filling up air time. And to make matters—and temptation—even worse, payday loan
businesses are also opening up shop on the Internet.
As a quick refresher from Volume 1, the
Consumer Federation of America (CFA)
describes payday loan companies as
providing “single-payment, short-
term loans based on personal checks held for future depos- it or on electronic access to personal checking accounts. In a typical transaction, a consumer writes a check for $117.65 to borrow $100 cash, with the total amount due by next payday or in up to 14 days. The $17.65 finance charge computes to a 459% annual percentage rate.” You pay the same fee every time you borrow the money, and people have been known to end up paying 700% to 2000% annual percentage rates.
The danger of these loans is they must be paid back in full on payday so you’re already starting off with less money than you had the previous payday. If you have to keep returning to the check-advance company, you can end up in real trouble.
It is our choices...that show what we truly are, far more than our abilities.
—J.K. Rowling
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