Why Payday Loans Are Worse Than Credit Card Debt

 

Payday loans can be much worse than credit card debt and if you aren’t careful, it can quickly consume your finances. Unfortunately, many people still continue to use payday loans even though they can be incredibly detrimental. When it comes to ensuring your financial stability, any type of debt should be avoided. Paying in cash for virtually everything you do is an economic standpoint that never fails. Below, you will find reasons why payday loans are worse than credit card debt and why you should steer clear of them.

Payday loans have substantially higher interest rates than credit cards

A payday loan has a 150% to 500% APR. This stands for annual percentage rate and it refers to how much you will be charged in interest in an entire year. Of course, payday loans only take about a month or two to pay off, so you will not pay anywhere close to this interest rate. However, that’s exactly the problem with payday loans. Credit cards have an APR of about 15-20%. It’s far more affordable to accumulate debt on your credit card than it is to take out a payday loan.

Payday loans have to be repaid quickly

Payday loan companies generally require that their clients begin to make payments within about one to two weeks after taking out the loan. This may sound like a graceful amount of time to provide, but they actually require that the entire loan be paid off very shortly after this. That means if you take out a $300 loan, you will have to repay the entire loan plus interest within one week to a month. This helps you save money because the longer it takes you to pay off the loan, the more interest you pay. Essentially these payday loans are good for those that need to pay bills in the short term.  However, it’s not beneficial to your budget when you could easily use credit cards and pay less interest altogether.

Payday loan companies encourage repeat business

If you take out a loan from a payday loan company and you are struggling to pay it off, they will likely encourage you to take out another loan. This is what some call the payday loan trap. It refers to being stuck in a trap with the payday loan company where you feel ineligible to get out of debt. The continuous loans that you take out will be digging a deeper hole and making your finances dependent on your loans.

Learn How to Eliminate Payday Loan Debt

 

Are you struggling with payday loan debt and you are wondering how you can eliminate the debt and get back on better ground, financially? Payday loan debt is a common problem and it has taken over the nation rather quickly. While these loans are unsecured loans they have higher interest rates because of this.  While credit card debt used to be more common, more people are turning to payday loans today and they are soon finding themselves in a financial battle with the payday loan company. If you want to eliminate this debt, you can use some of the suggestions below.

Manage your budget by signing up for Mint

The first step to paying off any type of debt, whether it is payday loan debt or something else, is to start managing your budget. Mint is a financial tracker that can help you do this and there are other free programs available as well if you have an issue with Mint. Essentially, it tracks everything that you spend money on so that you can see exactly how much you spend in a given month. Better yet, it categorizes your expenses into categories like groceries, fast food, etc. It also monitors how much money you make and should be spending in these specific categories based off your income.

Make substantial payments toward your payday loan debt

Remember that with payday loans, time is of importance. The longer it takes you to pay off the loan, the more money you are going to lose. Payday loans have high interest rates and that means you have to pay it off quickly. If you can make room in your budget, start applying as much money as possible toward your debt. Once you have the loan paid off, it will be easier for you to get back on track.

Stay away from taking out additional loans to pay off the original loan

Payday loan companies will often encourage you to take out more loans if you cannot afford to pay off the original loan. While this might sound like a reasonable solution, it can be devastating to your finances. Experts call this the payday loan trap and it’s not something that you want to fall victim to. Instead, just withstand the current loan and do the best you can to pay it off quickly. The interest will accumulate fast, but it’s a much better situation to be in than starting an entirely new loan.

The Types of People That Use Online Payday Loans

 

Online payday loans are undoubtedly targeted to certain types of people. They often earn a bad rap because of this. However, it’s important to understand what types of people use payday loans and what their reasons are for using them. What you might find is that many different types of people use these loans and they have very legitimate reasons for doing so. We all have unexpected expenses that can arise without prior notification and if you don’t have the financial means to pay those bills, payday loans are an excellent option.

Someone who has an unexpected expense occur at an unfortunate time

Unexpected expenses happen to all of us at some point or another. Your car could develop a problem, your home could need repairs, or your children could need new clothes. While some people might be able to stir up money to help afford these expenses, there are other people who simply can’t do that. They likely can’t afford it, or they need the money they have for something else. This is a situation that many people find themselves in and when they need cash, they turn to payday loan companies. These are businesses that can give you a no credit check approval and they can provide you with the cash that you need to help pay off these unexpected expenses.

Someone who has debt and would like to free themselves from this financial burden

Online payday loans are also an excellent option for anyone that has debt. If it seems like your debt just continues to accumulate and it never reaches a manageable point, payday loans can truly help. Once you receive your cash, you can completely pay off all of your debt. Of course, you will then be responsible for paying off the loan. However, one loan is much easier to manage than several things that were contributing to your debt. By paying them off, you can focus your attention on the loan and you will find that repayment on a loan is a lot easier than paying off debt.

Someone who would like to invest in something they know to be profitable

If you are business savvy and you’ve spotted an investment opportunity that could be very profitable for you, payday loans can give you the cash you need to take the plunge. If you don’t have any excess money to invest, a payday loan can provide those funds for you so that you can invest in what you know will be profitable, and then you can pay off the loan with the money that you make. There are lots of investors that use short-term loans to get cash so that they can upscale their investments and become profitable quicker.

 

FAQ To Get The Best Finance Options During The Holidays

What is Holiday Lending, And What Are Some Tips For Getting Better Deals ?

If you feel that you can’t handle the stress of your job anymore, then the best you can do now is to take a holiday break. But what if you don’t have the funds to spend a few days in another city, state, or even country? Well, you don’t need to worry, because there is a solution to your problem.

Those who are planning to go on a vacation but do not have enough money to spend for it, avail of travel loans. This type of loan, which is also called a holiday loan, can be obtained from various lending companies. Once you have submitted all the requirements and got their approval, the lender will disburse the funds to you. The loan terms usually include the interest rates and the re-payment period. Holiday or travel loans are considered short-term loans and carry an average interest rate of 9.55% and a short re-payment period.

The idea for holiday lending stemmed from people’s need to take occasional breaks from work. But since going on a holiday entails spending a good amount of money, most people just don’t take their much-needed vacation. To address this concern, lending institutions came up with holiday loans so that employees can take their vacations with the help of the money they borrowed.

This type of loan is now becoming popular because it is easily available and the interest rates are not really high. More and more people are making use of holiday lending offers to pay for their holiday expenses. In fact, there are borrowers who are taking out these loans to buy gifts and presents for their loved ones during the Christmas season as well. That is the beauty of holiday lending, it is very flexible and you can use the money for anything.

The amount you can borrow depends on your projected holiday expenses, your ability to pay it back, and sometimes, your collateral. Lending institutions are offering loan amounts from $2,000 to $20,000. Lenders offer different loan amounts, repayment period, and interest rates and it is always recommended that you choose the lender that offers lower interest rates and longer repayment period.

 

You have the choice of getting a secured or an unsecured holiday loan. A secured loan requires a collateral, and it enables you to get a higher loan amount. An unsecured loan, on the other hand, does not require collateral therefore there is no risk to your assets. However, the loan amount you can borrow is significantly less than a secured loan.

Subsidized and unsubsidized Stafford loan


Continuing the total enrollment period without any hassle especially in the financial aspects is nothing but a blessing. And this blessing is provided by the education board of USA. Yes, the student loans are the blessings for the students who are in need of money to complete the education. Generally, costs of education are not a matter of joke. Even though you can carry the undergraduate part, the higher education needs expenses if you have not gotten a scholarship from a university. So, you must need to get financed in this regard.

For the students who are in dreams of completing the higher education and need money for that needs to get a Stafford loan. This is a particular financial scheme under the US student loan. The students can grab this loan for completing the higher education. But, students who are studying in schools are not allowed to get this. This is applicable for those who have completed school and continuing towards higher education.

The Stafford loans can be both subsidized and unsubsidized. There are reasons behind being subsidized and unsubsidized. All the students can not get a subsidized loan. On the other hand, not all the students will be imposed with an unsubsidized loan. A judgment procedure is being made before the lenders finance someone. And after that they decide whom to allow which type of bad credit personal loans. Here you get to know details about the subsidized version as well as the unsubsidized version.

The subsidized version of the Stafford loan:

The word “subsidized” lets us pasteurize something which is facilitating and saves people with money. Well, in times of the term subsidized loan, we can picture the same thing as well. The Stafford loan becomes subsidized in the ways when the federal government carries the interest of the loan and also, the interest is lower. The borrowers will have to take car o the principal amount and that amount will have to be repaid in several installments.

So, definitely the subsided version is facilitating and saves a borrower a lot of money. In fact, the main pressure of a loan derives from the interest rates. And if that rate is being taken care by the government and the borrower will have to just take care about the principal amount, which is really a facilitating idea.

But, not all the students are allowed to get this unsecured loan. Only, the students who are financially independent can get this. In fact, students who are carrying the education cost and other costs by themselves are only allowed to apply for a subsidize3d Stafford loan.

The unsubsidized version of the Stafford loan:

In the contrary to the subsidized version, the unsubsidized loans offer the borrowers with such repayment solution where the students will have to take care of the principle amount with the interest rate. In fact, both have to be repaid by the borrower in several installments. And the students who are dependent on parents or any there guardian for bearing the education expenses, will get this.

Strategies to adopt to repay the student loan


Under the student loan schemes, the students get paid for bearing the educational expenses in the total enrollment period. Being federal financial aid, the student bad credit personal loans are easy and affordable. Still, as the students have to repay the debts, it becomes tough for him/her to manage the debt repayment money. But, the default may occur some negative consequences.

So, it’s better for a student to repay the debts timely. Though it becomes tough for a student to manage debt repayment money, adaptation of some simple strategies can make it possible for the students who are drowned in student debt. Here you get the strategies to adopt which would make things easier to manage the debt repayment money of the student unsecured loan:

Utilizing holidays to earn money:

A student must get weekends. Generally, weekends are meant to be making fun. But, if you have to repay the debts, you will have to sacrifice the fun elements. In fact, if you work in holidays as part time worker or full time worker, you can manage some extra money for yourself. You will have to utilize this money to repay the debts. If you manage to earn more, then repay a larger amount so that your debts get reduced in the future. At least, if you can reduce the debts in this way, you will not have to sacrifice making enjoyment in the near future.

Utilizing the time after college:

Generally, students get time after college and that time is generally the evening time. Students can utilize that time as well. In fact, the after college time is the best time to do a part time work and generate some extra money. Try to reduce debts as much as you can. The money you are earning might be more than the debt repayment installments. But, pay more to reduce debts. Also, if you can utilize the time after college, you may not have to work at holidays. So that, you can enjoy the holidays in the ways you want.

Cutting the costs of the bills:

Earring money is not the only solution these days. The expenses are getting high and the bills and other expenses makes things impossible. Especially, after bearing all the costs, it might be difficult for you to manage debt repayment money even if you are doing a part time job. So, you should cut the costs of the bills. Sacrifice some leisure and pleasure. Do not use air conditioner or hitter in the room. Use as less electricity as you can. Use solar oven instead of electric one. In this way you can cut the costs of the bills and save money for debt repayment.

Making good result:

Making good result in the class would allow you to apply for forgiveness. If you are the potentiality to make good score and possess an honorable profession in life, do not wait any longer to apply for forgiveness. The forgiveness can make you debt free.

 

Your FICO Score and Why Lenders Use It To Determine Interest Rates

FICO stands for Fair Isaac Corporation and it is a credit score model that uses your credit report to come up with a standardized number that reflects your ability to pay back debts that you owe as well as your ability to take on more debt. While there are a number of factors that go into the score, the FICO score has become the accepted way to easily determine credit worthiness.

The FICO credit score is determined by a number of factors but the two most important are payment history and the amount of revolving credit that you have available. These two factors make up 65% of your score and go a long way towards determining your credit worthiness. The payments history shows that you have the ability and the history of making payments in full and on time. Making sure that you pay your credit card bill on time is the single most important factor when you are looking to raise your credit score or keep it in good standing. The amount of revolving credit is the amount of credit you have available versus the amount that you currently have due. You want to make sure that you have more credit available than the amount that you owe to get a favorable credit score, therefore closing a credit line can adversely affect this number.

The other three determining factors for your FICO credit score are length of credit history, the types of credit you have, and recent credit inquiries. All of these total 35% of your score, so the payment history and revolving credit have significantly more leverage in determining your score. The length of credit history is how long you have had credit cards or credit lines and how long they have been in good standing. The types of credit you have is important in determining your score to make sure that you have a diverse selection of credit. Some examples may be revolving credit, consumer finance, or a mortgage. Recent credit inquiries is simply the amount of times you have applied for new credit cards or credit lines.

There are a number of factors that go into determining your FICO score and your score can be anywhere from 300 to 850, although most people fall within the 60th percentile and have a score of 650 and 799. While there are three reporting bureaus; Experian, Equifax, and TransUnion, your FICO score average will help determine your creditworthiness and will determine your interest rates for credit lines and mortgages. Using the FICO score is a great way to level the playing field and determine someone’s credit worthiness based on their ability to keep and pay off debt responsibly.

Learn What Financial Advisors Recomend Most For Debt Reduction


Debt reduction takes time, effort and discipline
. It involves changing habits that have lead to accumulating debt in the first place. The person must be resolved to eliminating bad spending habits and developing financial discipline that will lead to paying off debts and staying out of debt. Financial advisors recommend the following step by step plan for debt reduction.

The first thing to do is to balance your cash flow. That means making sure you are not spending more than you are bringing in. This will require establishing a budget and eliminating all unnecessary spending. Write down all of your income sources on a monthly basis and total them up. The write down everything you spend in a month, item by item, and add them up. Compare the two figures to determine if you spend more than you earn. If you spend more than you earn your debt will continue to build until you reduce spending to a level less than what you earn.

Go through the list of spending items and determine which items you can live without. Eliminate every item that is not absolutely necessary for you to maintain your housing, transportation, job, health and current debt obligations. The items that are left will become the core of your budget. If the items that are left are still more than your income then you must find additional income through a part time job to make up the difference. Once you have balanced your cash flow and established a core budget of living expenses you begin to work on eliminating debts.

Make a list of all debts and include the creditor, amount owed, interest rate, and monthly payment. Total the monthly payment column to determine the amount paid out each month on the debts. Group the debts as short term (less than six months to pay off), intermediate term (seven months to 60 months to pay off) and long term (more than sixty months to pay off). By working on paying off the short term debts as quickly as possible, you will boost your credit score and free up cash flow. Some people may be able to get a debt consolidation loan, an equity loan on their house or use interest free credit card offers to consolidate debt and reduce interest payments, but unless you go through the initial steps to get control of your spending and establish a budget, chances are you will end up in worse shape than before, because you will continue to accumulate debt. Consolidating debts is a good thing if discipline is used and the freed up cash is used to accelerate payment of the debts.

As short term debts are paid off take the amount used and apply it to the next shortest debt, until all of the short term debts are paid. Then take half of the money that was applied each month to short term debts and use it to establish an emergency fund bank account and apply the other half to the shortest term intermediate debt. Continue the process of building up the payments as each debt is paid until all intermediate debts are paid, then take half the amount put toward intermediate debts and contribute it to your savings and apply the other half to long term debt payments. Continue this process until all debts are paid off.

By following this process you will be in a solid financial position in the shortest amount of time and by continuing to exercise financial discipline you will have a sound financial future.

What the slow job growth market means towards consumers and their finances

The US economy created only 69,000 jobs in May 2012, which is much lower than the expected figure confirming the fact that the US economy is rushing towards another spring slowdown. The Labor Department stated in the previous week that the unemployment rate moved up to 8.5 percent, this has happened for the first time in eleven months. The reasons attributed to the slow job growth market are uncertainty in the real estate scenario, higher pump prices and speculation over Europe economy.

The media reported this news following a government report on June 7, 2012 which revealed that the US economy moved at a 1. 9 percent yearly rate in the first quarter, which was much below the initial estimate of 2.2 percent and a much sluggish growth rate compared to the 3. 0 percent achieved in the fourth quarter. This could also create more problems to the US President Barack Obama as he goes in for re-election against former Massachusetts Gov. Mitt Romney. Romney issued a statement saying, “Today’s weak jobs report is devastating news for American workers and American families.”

The slow job market means consumers will be more tight-leashed about their finances and will look for more choices, better deals and better ways to save money on the products or services that they want to buy. According to market experts, consumers will focus continuously on price and value. Philip Whittaker a market analyst who has been analyzing consumers buying patterns said, “Consumer sentiments are obviously below the historical average and is returning to 2011 levels.”

Clearly, the consumers are becoming cost-conscious and they are looking for offers at convenience stores, club and drugstores. The sales at supermarket stores are noticeably declining for FMCG (Fast Moving Consumer Goods) products. The leading food company Heinz for instance, is experimenting with smaller and cheaper packs to cater to consumers who have decided to put off buying big bottles and larger packs of the product. Most companies have put off its sales earning growth at 6 and 9 percent on an average and believe that the growth over the next few years will be on the slower side.

The Society for Human Resource Management has stated that the hiring pace will slow down in June for the fifth time in the past six months compared with the way things were a month ago. Compared to Mother’s Day, the average consumer plans to spend 23% less on Father’s Day (Sunday, June 17, 2012). The retailers and stakeholders are keeping a steady watch on the economy and are trying to make the most of the declining economic situation to make sure that they manage to sell their products and services without hoarding them in their warehouses. Consumers on the other hand are looking for price cuts. So expect some better offers and deals if not price reductions for the consumer as retail companies wrestle their way through to register enough sales against their projected estimate.

Debt Reduction Solutions Can Help You Achieve Financial Stress Relief

Thousands of Americans are battling heavy debt scenarios and the resulting enormous financial stress is driving people towards desperate measures. If you’re one of them, do not fret as debt reduction solutions can help you achieve financial stress relief. A favorable option to bankruptcy, these debt reduction solutions are offered not only to individuals but also businesses.

Benefits of Debt Reduction Solutions

If you’re deep in debt with multiple credit cards and other loans while barely keeping things afloat by paying up minimum dues, it is high time that you seek a debt reduction alternative. From debt analysis to credit counseling, there are a variety of debt management solutions available. A genuine debt management solution offers the following benefits.

 Consolidation of all dues into manageable chunks
 Lower rates of interest
 Penalty relief and fee reduction
 Relief from collection calls
 Customized debt repayment plan
 Prevention of bankruptcy
 Path towards financial consolidation and stability
 Credit counseling

Think of a debt reduction solution as your road towards a debt-free destination. With a disciplined approach and proper financial guidance you can indeed get out of the difficult financial conditions and become debt free.

Debt reduction plans and credit counseling agencies work with lenders to help people who’re on the verge of bankruptcy. Common solutions are debt consolidation, lowering of interest rates and elimination of late fees and penalties accrued by the borrower. Your monthly payments will be considerably reduced. Of course, this will severely damage your credit scores but you would think that it is still better than going totally broke!

Debt settlement companies provide the two most important things that you need when you’re on the verge of bankruptcy, time to repay and quick short-term loans to pay up the dues. When you’re in personal financial debt, you’re already low on the credit score front and no lender can risk lending to you. A debt reduction solution ensures that the debt management company handles your monthly payments. They provide you with a solid repayment plan after doing a thorough analysis of your debt situation. Once you sign up for their services, the debt settlement company will also take all the calls from the creditors. All you need to do is bring in some financial discipline, cut down on spending and stick to the new repayment schedule.

There are a lot of people desperate to get out of debt and several so-called debt relief programs up for grabs. Research the credentials of the debt relief program and ensure you’re not taken on a ride when you’re already in a soup! The amount of debt owed by you must come down to 50-60% of the original amount due in case of a debt settlement plan. Debt management plans are not as attractive and your choice of plan will really depend on your particular situation. Some debt management solutions also offer consumer benefits, much like a credit card and you could benefit from such offers while you’re still trying to get out of your financial hardship.