Cash Advance Questions

Once crazy for credit, Americans have been cutting back on the use of their cards -- or in some cases, cutting them to shreds.

Tired of paying for purchases made long ago (such as gas or a restaurant meal), people such as "Suzi" from Indianapolis have decided to go cold turkey, and closed their credit-card accounts. "If we want something (now), we pay for it in cash," she says. "If we can't afford it, we do without or wait."

The upside? "We no longer have to dread our bills in January," says Suzi.

Not surprisingly, this corresponds with the increase in payday advances taken out, as many people have found the single short-term fee preferable to ongoing interest charges.

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LATE PAYMENTS THROUGH THE ROOF, SAYS AMEX

LATE PAYMENTS THROUGH THE ROOF, SAYS AMEX

The number of Americans paying their credit-card bills late is on the rise, according to American Express.

"Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations," said company CEO Kenneth Chenault. American Express adopted a "cautious view" after cardholder spending slowed and overdue payments rose in December.

As credit conditions worsen, more Americans are turning to alternate sources of funds such as cash advances -- which can be repaid quickly, allowing the borrower to avoid high interest payments. Payday advance applications are expected to increase as Americans find paying their bills increasingly challenging.

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CHRISTIAN BORROWERS SHOW FAITH IN PAYDAY LOANS

According to Forbes Magazine, areas with large concentrations of Christians are the "Promised Land" for payday lenders.
The magazine's website cited a study that portrayed such areas as the Southern Bible Belt as hotbeds of payday loan lending. The study claimed a "strong correlation between the number of payday lenders within a geographic area and the political power of conservative Christians within a state."

According to SmartMoney, industry analysts estimate that 19 million U.S. households used a payday loan in 2006. This number is sure to grow this year as more Americans look to such advances to address their immediate cash needs.
Another factor: the realization that "regular" bank lending may be restricted as a result of recent trouble in the credit markets.

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WHEN APPLYING FOR CASH, BE SURE TO TAKE DUE DATE INTO ACCOUNT

There are a variety of factors to consider when applying for a payday advance, such as lending fees and APRs. However, don't make the mistake many borrowers do, and ignore the due date.
Most payday lenders offer a two-week repayment term; still, some borrowers are unable to repay the money within that time period. That's not good -- failure to repay by the stated repayment date results in additional service charges plus a higher interest rate going forward.A lot of borrowers suffer the consequences because they're unaware they can contact the lender about extending the repayment period. If you feel you won't be able to pay back your advance within the two-week period, immediately talk to the lending agent: you may be able to buy another week or two without suffering severe penalties.

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2008'S TOP AUTO BARGAINS: A BONANZA FOR LOAN APPLICANTS

Car sales have slumped to levels not seen in a decade -- good news for both buyers and borrowers.

Declining sales mean a rising number of bargains for the consumer; for the auto loan applicant, it could mean a lower down payment, and a better rate on down the line. Not to mention a load of discount financing, factory-to-dealer incentives, and rebates right now.

The models with the deepest discounts may surprise you, such as the Mercury Grand Marquis, which comes with a rebate of up to $6,500. Other vehicles which made the list include the Chrysler 300C, the Dodge Ram 1500 and the Ford Explorer. One note: financing and discounts tend to vary by region, so check around for the bargains in your area.

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NEW PAYDAY LOAN BILL PASSES FIRST SENATE TEST

Good news for borrowers: the U.S. Senate has given initial approval to proposed legislation which would make interest rates on payday loans more attractive than ever.

House Bill 1310 would cap rates on cash advances -- as well as limit the transaction fees charged to consumers. The proposed bill also would keep borrowers from extending their loans repeatedly, or taking out multiple loans, both of which make repayment a lot tougher to manage for the consumer.

The bill now goes to the Senate Appropriations Committee for consideration, before returning to the Senate for final approval.

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TAX SEASON: TIME FOR ANOTHER KIND OF PAYDAY LOAN?

This time of year, Americans' thoughts turn to tax returns. Increasingly, however, more taxpayers are looking at their refunds as a new kind of payday advance.

Sometimes called "Refund Anticipation Loans," these loans amount to cash advances granted to people expecting money back from the government. Giant tax-preparation firms such as H&R Block have become major "lenders" of these advances, which have gained big-time popularity in recent years.

Before you go jumping in, however, consider the consequences. First there's the interest: customers may pay anywhere from fifty to five hundred percent on these loans. Then there are the fees: H&R Block, for example, charges over sixty dollars for a refund payday loan of three thousand dollars.

Above all, keep one thing in mind -- Refund Loan applicants are essentially signing over their refunds to their tax preparer. Bottom line: if you can afford to wait for your money, you might want to do just that.

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Cash Advance Advice

Cash Advance Advice

A Cash Advance can be a lifesaver, but like most emergency equipment should be used only when absolutely necessary. Remember, a loan can keep a check from bouncing, but in the long run won't solve what created the financial difficulty in the first place.
In fact, a high-interest-rate loan that has to be repaid the next payday can make a tight financial situation even worse. Granted, coping with short-term financial problems without taking on more debt can be difficult, but with some creativity and determination it can be done.

Some alternatives to consider before resorting to a payday loan:

Start a $500 "Rainy Day Fund."
Yes, times are tough and saving isn't always easy -- which is exactly why you SHOULD start saving money. Building an emergency nest egg doesn't take as much as you might think; even $10 per paycheck adds up nicely after just six months. Better yet, if you have direct deposit, have your payroll manager deposit the money into a separate savings account -- you'll be surprised how much you won't miss the cash. (For both inspiration and information, visit www.AmericaSaves.org)