Emergency Payday Advance

by : Ken Marlborough

Payday Advance companies often come with enticing ads such as "E-Z Payday Cash..." "Cash at your doorstep on the same day.." etc. on the FM, TV, Internet, and in mailboxes. And they come up with a range of words such as cash advance loans, check advance loans, or deferred deposit check loans. They are indeed easy to secure. But are they economical?

Let's imagine someone named Ellen borrowing $300 from a lender – creditor for a two weeks period. According to the agreement, she writes a personal check to the lender for $345 (this includes the borrowed amount $300 and a $45 fee).

In the above example, the interest fees of $45 is the equivalent of $1,170 for a year, or 390 percent APR. This is far higher than the APR announced by institutions such as Bank of America for loans. But the latter require collaterals, real estate to mortgage or some other security. Not easy for everyone.

On the ensuing payday, she either redeems the check by paying the $345 in cash, or lets the lender withdraw the amount, by using her personal check, from her bank. Some times she may roll over the check by paying an additional fee to extend the advance period, say, for another two weeks. In case she's left with no money in her account to cover the personal check she submitted to the lender, she could incur additional bank fees or face legal action, for the bounced check.

It is advisable to plan finances carefully by following a few steps as follows: calculating the total `income' and `expenses' amounts in a month, subtracting the `total expenses' from `total income' and monitoring the remaining amount. This simple arithmetic will tell us as to whether the person has some savings or not. A financial barometer!

By depositing 10% of the total income into a savings account or other kind of investment. This will serve any `rainy day'.

By not spending more than what is earned.

Despite meticulous planning, we do sometimes get into emergency situations like Ellen. This is the time, when we can look for an Emergency Payday Advance as the last resort.