The Pros And Cons Of Payday Loans

ayday loan stores seem to be popping up everywhere and a few people think that they are the best things ever, but in reality they are the tabloids of the credit industry, as far as reputable credit institutions are concerned. It's obvious that they are supplying a tangible need for the demands of the public, or else they wouldn't be surviving. So if that many consumers are freely choosing to deal with them, then why are payday loans bad?

Maybe the best way to illustrate this point is to use our imagination a little bit and create a real-life scenario that many people face.

Payday loan companies defend their position by claiming that they are offering a service that is needed by many people. More often than not, life deals a bad hand of unexpected problems that you need help with. Why are payday loans bad, they ask, if you have car trouble or a medical emergency and need fast cash now? It is an
The industry made, in 2010 alone, over $4 billion on interest. When attempting to come up with an answer to the question as to why payday loans are bad, most can see that they are taking advantage of people when they are at a time of crisis, when they desperately need help, instead of being socked with high interest charges.

Another drawback to payday loans is that they don't reflect a good report to your credit score. If you fail to pay the loan off, your credit score is jeopardized.

Because payday loans are notorious for charging astronomical interest rates, they give the whole industry a bad impression from the very start. In comparison to the normal credit card company that charges an annual rate of 32% interest, the two-week payday loan at 17.5% interest generates an annual interest rate of 455%. The numbers can be staggering, which adds proof to the fact that they are a bad financial decision from the very first