Never Use Payday Loans

Never Use Payday Loans
Should I​ Ever Use a​ Payday Loan Service?
In the​ past several years,​ payday loan stores have been popping up all over the​ country .​
With names like Check Into Cash,​ the​ Cash Store,​ and EZ Money,​ they offer unsophisticated consumers the​ promise of​ quick,​ easy cash with few questions asked .​
But at​ what price?
The High Cost of​ Easy Money
Americans paid more than $6 billion in​ payday loan fees in​ 2018,​ and the​ number is​ likely to​ be much higher when the​ results for 2018 are tabulated .​
Payday lending is​ a​ big business,​ and it's also one of​ the​ fastest growing in​ the​ country .​
EZCorp,​ for example,​ was a​ lowly Texas-based pawnbroker just a​ few years ago .​
Thanks to​ expanding into the​ payday loans business in​ 2002,​ the​ company has more than quintupled its profits,​ and its stock had the​ best one-year price performance of​ any company traded on​ the​ major exchanges or​ NASDAQ,​ through June,​ 2018.
While buying EZCorp's stock a​ year ago would have been a​ wise financial decision,​ actually using the​ company's services has never been a​ good idea .​
The reason EZCorp and companies like it​ make so much money is​ because they rip off their customers,​ and this is​ hardly a​ matter of​ opinion .​
According to​ EZCorp's 2018 report for shareholders,​ the​ average payday loan has an​ annual percentage rate (APR) of​ 530 percent - and that's not a​ typo - that's highway robbery .​
So why would anyone ever use a​ payday loan service?
Target Market - the​ Unsophisticated and Credit Constrained Consumer
Most of​ the​ payday loan business's customers are people who are unsophisticated and / or​ have made bad decisions with their credit in​ the​ past .​
These are people with no savings and no credit,​ who live check-to-check .​
They don't realize that when they agree to​ pay a​ $40 fee for a​ $200,​ two-week loan,​ they are paying an​ astronomical annual interest rate .​
Or in​ some cases,​ they just don't care - they feel that they have no other options.
A disturbingly large percentage of​ people use payday loan services in​ order to​ avoid incurring NSF (non-sufficient funds) charges with their banks .​
People living check-to-check,​ with no access to​ conventional credit,​ can be devastated by unexpected expenses .​
Imagine a​ single mother who needs to​ write a​ $200 check to​ get her car fixed in​ order to​ get to​ work the​ next day,​ but she doesn't have the​ $200 in​ her bank account .​
She writes the​ check and then immediately goes to​ the​ payday loan store,​ where she can usually borrow the​ $200 with nothing beyond verification of​ her employment with a​ recent check stub .​
In this case,​ the​ single mom may actually be making a​ wise choice - since NSF fees are said to​ have an​ APR of​ 665 percent,​ and bank overdraft fees are even higher,​ at​ 1,​160 percent APR .​
Clearly,​ the​ system is​ stacked against those who need the​ most help.
The Cycle of​ Indentured Servitude - And How to​ Avoid It
In the​ worst cases,​ people end up working all week in​ order to​ pay back their payday loan,​ and then have to​ take out another payday loan in​ order to​ make ends meet .​
Thus,​ the​ cycle continues,​ and these unfortunate people are relegated to​ the​ modern equivalent of​ indentured servitude.
The best way to​ prevent this from happening to​ you​ is​ to​ always maintain adequate lines of​ credit .​
In the​ above example,​ if​ the​ person could have simply charged the​ $200 repair bill on​ her Visa or​ Mastercard,​ all would have been well .​
Using a​ credit card to​ automatically pay for your regularly occurring charges,​ such as​ your phone and cable bills,​ is​ a​ good way to​ avoid NSF or​ bank overdraft fees,​ as​ well.
If you​ find yourself in​ trouble,​ be sure to​ always pay the​ minimum due on​ your credit cards - make this a​ priority second only to​ survival .​
If you​ default on​ your credit cards,​ you​ may have a​ very difficult time getting credit again in​ the​ future .​
Avoid the​ mistakes of​ the​ payday loan consumer,​ and of​ course,​ avoid the​ payday loan stores .​
Your money should be applied for your own benefit,​ not to​ the​ bottom line of​ unethical companies that make profits for their shareholders by exploiting the​ poor.
Take Care,​

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