The few other possibilities to payday advances can be more expensive

Critics of the pay day loans industry claim that these loans are too expensive. However, payday loans are actually cheaper than the other possibilities. For instance, a cash advance can be far cheaper than paying the minimum payment on charge cards. The principal may never be touched on a credit cash loan, if only a minimum payment is made. It is incredibly easy for an over-limit fee to add up to thousands of percent in interest, which is more than any short term personal loan from a payday lender. It also goes often unmentioned that banks and credit unions do not all offer a payday loan type product because they can't afford to.

Low interest rate loans in comparison to over-limit

Even $1 over will often cause a person to end up with an overdraft fee because a debit card policy will automatically allow one to pay for things with more money than one has or even allows one to withdraw a lot more than one has at an ATM. Overdraft fees for just $1 over can accumulate interest of 1,277,500 percent if you are getting a $35 overdraft fee and paying it off the next day. Both Wells Fargo and Bank of America use $35 as their fees for when customers get an overdraft. Payday advances have very low interest rate when being when compared with these over-limit fees.

No alternatives accessible

Banks and credit unions do not have a real option for pay day loans — for a reason. They cannot afford to. Victor Stango did a study that showed cash advance venders are easier to access than credit unions and also are able to afford to have low prices rather than credit unions which lose cash off of things like this. Throughout the nation, payday loan alternatives were only accessible at a few credit unions. In fact, only 6 percent of credit unions had this service. It is also hard for banks because of strict requirements. You will find lots of them making it hard to change things. Most financial institutions will not give somebody with bad credit a loan.

Potential predators or innovators?

Payday loan lenders took a big risk in moving into that market. It is something that nobody else was willing to even make an effort to do. They didn't just go into the market. They mastered the market. They’re called predatory lenders for this very reason. Read more facts and statistics within the new payday lending industry report on Personal Cash Store.