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Yes.. there are still pirates. But they call themselves financial institutions

25 Nov

Did you know that John Dillinger is still alive ?  Yep.. he’s alive and well, but instead of robbing banks, he now works for them and is robbing the consumer.  Of course, they’d never admit to that, but how else do you explain the rapid rise of payday loans and cash advance online services ?

These services can legally fleece you with APR rates of 300%, 400%, even 1000% and they do it while claiming to Cash Advance Onlineprovide a valuable service.  Need emergency cash ?  They are waiting in line to help you out… just be prepared to pay for the privilege.

This is how a payday loan works.  If you go to a local branch, you’ll take proof of employment ( usually three pay check stubs ), your checkbook, and your drivers license.  Write them a check for up to $1,500 plus a service fee which can be $50, $100, $200, or more, depending on their terms and length of the loan, but usually the loan is fixed for 14 days, or until your next payday.

So let’s say you have written a check for $1,200.  They agree to hold the check until your next payday and deposit $1,000 in your checking account the next day.  When payday rolls around, they redeem your check for $1,200.  It sounds all clean and simple, you might even be giddy… except not only have you just spent your pay check before you even received it, you also gave them $200 for the privilege… that’s 20% for a two week loan, or an effective APR of 520% !  Seriously, you better have needed that loan pretty badly cuz you just paid a lot for it.
There are other alternatives for emergency loans.  Join a credit union if you do not already belong to one.  They will often provide short term loans with installment plans at WAY better rates.  Or look into a cash advance on your credit card.  I’m not talking about an ATM, call your credit card company and ask if they can arrange an advance with 4-12 week terms to pay it back.

If your emergency need is for bill payment and you don’t have the credit available on cards, call your creditors and ask for a delay in payment.  Most will work with you.

I’ve written more on this subject on a website I just launched.  Visit  I’ve included more alternatives to cash advance loans, and even included some links so you can read what the Better Business Bureau and Federal Trade Commission has to say about your rights as a borrower.

Good Luck.