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Familiarize yourself with money maneuvers that feel sus.
Payday loans are predatory products that people with financial problems often turn to in times of need. These short-term loans are also known as cash advances mainly used for covering basic living needs such as utilities, car payments, credit card payments, housing and groceries.
How are these products predatory? First, average interest rates vary from state to state, but interest rates are usually so high that borrowers fall into a debt trap. Texas, for example, has the highest APR of 664% (well above the 36% APR cap have urged advocates in a number of other states). That means a borrower who needs $300 to cover rent would have to pay back $1,992 — which is often repaid by taking on more debt.
Second, Advertisements for payday loans disproportionately target Black and Hispanic demographics, and cash lending locations are typically in low-income areas. Enough said.
So we strongly advise against payday loans at all costsHere’s what to do when you or someone you know is struggling to break out of this cycle:
- Get help with debt management through the National Foundation for Credit Advice.
- Focus on a debt avalanche approach through cash out highest interest debt First.
- Connect with yours local support group for cash benefits or help paying for groceries.
- Negotiate your spending how Talk to your landlord if you are late with your rent. Contact your credit card company to see if you can change the due date on your payment.
It is important to remember that payday loans are a result of social failure, not single. And both the private and public sectors are work to eradicate The predatory practice: Organizations like the Center for Responsible Lending are working to end abusive lending, and more than 16 states have outright banned payday loans.– Myriam