Recently, banks have joined the trend in offering short term, small amount loans to customers all throughout the United States. Wells Fargo was the first bank to introduce cash advance imitation loans. In due time, they became the catalyst for institutions such as Fifth Third Bank, Religions Financial, and U.S. Bank. Unfortunately, these loans are often dangerous, and can cheat innocent citizens out of thousands of dollars.
A bank payday loans is slightly different from the traditional independent payday loans that have swept the nation. Bank loans can only be made if the borrower is receiving direct deposits from an employer of government benefits. According to a Dallas news site, 25 percent of these loans are granted to social security recipients. As well, many of these borrowers are elderly people. The banks usually charge triple digit interest rates for one of these short term loans. Unlike traditional payday loans, these bank loans usually have a more complicated and restricted application process than independent short term loan organizations. A traditional payday loan store or website can be restricted to certain interest rate caps. 17 states in America have enacted a 36 percent interest rate which protects many customers from borrowing over their heads. Banks are exempt from these mandatory interest rates, so they can often bring their prices much higher than their counterparts.
The Center for Responsible Lending issued a warning last year against the up-and-rising popularity of bank payday loans. These loans, the CRL states, can lead up to 16 loans in succession and 175 days of indebtedness. This is twice the length of time that is advised to carry a loan by the Federal Deposit Insurance Cooperation.
An online payday loan is a much more convenient way to borrow. Customers need to be cautious when taking out any type of short term loan. Still, online payday loans are often the safest and easiest transaction. These loans take just minutes to apply for and many companies only ask for basic information. The companies can usually complete your transaction within a day, getting you the money you need as fast as possible.
If you are considering a payday loan, you must be cautious and borrow with care. A reckless borrower will get into trouble, because payday loans are only meant to last two weeks to one month, or until your next payday. When these loans are extended or “rolled-over” it can carry extreme consequences and costs can skyrocket. A wise borrower will be able to obtain one of the loans with little effort and pay them off on time.
To borrow an online payday loan, you will need to find a reputable website that services your state. Make sure that this website as security systems installed, so that your information will be kept. Check to see if the business is accredited by government agencies, such as the Better Business Bureau. Cautiously read through the company’s agreement contract, noting every fee, due date, and interest rate that is stated. These companies are required to state all of their rates up front, so you will not need to worry about encountering extra fees later in your loan process. Make sure that you can pay your loan back on time, and make a plan to confirm that you have that money in any circumstance. It is wise to only borrow 25 percent or less of your next paycheck. Do not roll over a loan. This may seem convenient if money is tight when the loan is due, but can get borrowers into a lot of trouble as interest rates become more cumbersome.