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Are Payday or Cash Advance Loans a Good Idea?

We all know what it’s like to run a little short of funds before the next paycheck. Unplanned expenses like medical bills, car repairs and sudden school fees are common culprits.

But when your bank balance runs low, is it wise to seek temporary assistance from a payday or cash-advance loan operation? The recent economic downturn has allowed payday loan websites to flourish. But beware: These loans often stipulate high interest rates in exchange for the cash you need —oftentimes above and beyond a standard bank or credit card. Before you commit to borrowing the money from a payday lender, you should be aware of all charges, as well as penalties, in the event you cannot repay the loan in time.

Interest and penalties aside, it may be prudent to take a look at your spending habits to determine if it’s possible to avoid turning to a payday or cash advance loan. Once started, the lending cycle can be hard to break. Upon receiving your paycheck, you pay back the loan and interest, but you may find yourself short on cash once again.

Be very careful when turning to payday or cash advance loans. If you don't understand the terms of the loan, stop, reread the agreement and ask questions. It's your money and you have every right to protect it.