Payday Loans Can Make Sense for Many Borrowers
While there is much public debate about payday loans, the truth of the matter is that they exist to fill a need and they do so rather well. Payday loans are not designed to help people buy a new flat-screen television or go out to a nice restaurant, but rather to help people get out of a financial crisis, and they serve that purpose rather well. When a consumer is behind on bills or knows that they have checks that are going to bounce, taking immediate action is necessary. With many banks charging 30 dollars or more for every overdraft, no matter the size, fees can add up quickly. Two overdrafts of less than five dollars each can easily cost a customer seventy dollars or more, with the debts being returned unpaid so that merchants can charge bounced check fees as well. In all, the cost of these two checks can equal well over one hundred dollars.
With payday loans, however, the same customer could borrow as little as one hundred dollars against their next paycheck. The debts would be paid, leaving ninety dollars to meet other expenses. On payday, the loan amount plus an interest fee that ranges from fifteen to thirty dollars per hundred dollars borrowed on average would be deducted. Even considering the highest interest rate, the customer pays only thirty dollars in fees as opposed to over one hundred dollars for letting the checks negate their bank balance.
The fact of the matter is that payday loans are a necessity in financial emergencies, especially in today’s economy. While no borrower is advised to take out a payday loan that is not necessary, many people need them just to keep from going deep into the red. Overdraft fees from banks and stores compound, and can cost far more than the price of the merchandise the customer purchased.
In truth, payday loans are needed. Not everyone is in a financial position to meet all of the demands of their bills and living expenses when two income families are frequently reduced to only a single income. These loans provide a valuable service to people with no other alternative but to go into debt, and when properly managed, they can help people thrive when they once would have struggled to maintain any hope at all of finding their way out of a mounting debt or an onslaught of overdraft fees.