Your CREDIT Your MONEY|October-December 2016

Okay kids. It’s quiz time!

What is the most expensive legal form of credit available to you?

If your answer is a secured credit card at 24% APR, you are off by a mile. Try getting a payday loan.

Payday loans, also known as deferred presentment, are currently available in 20 states plus the District of Columbia. They are short-term loans, generally 7 to 14 days, against a post-dated check. In Arizona, this loan against the paycheck you haven’t yet earned carries a 15% fee. On the average payday loan of $300 for eight days, this 15% fee equates to an APR of 459%!

Check cashing and payday loan shops are popping up like mushrooms in plaza storefronts around my downtown neighborhood in Phoenix, Arizona. Signs announcing “Cash King coming soon” appear at 7th Street and McDowell next to the Starbucks and at Central and Thomas between the florist and the dry cleaner.

Will people take an advance on next week’s pay to buy a Mocha Frappuccino, I wonder? Will they borrow to retrieve their dry cleaning or to buy flowers for their girlfriend? As Cash King joins Cash One, CheckMate, EZLoans, Money Mart, --there are more than 250 shops in the state of Arizona with one-third in the City of Phoenix--I have to wonder. Is there a need for payday loans?

According to the payday loan propaganda, everybody needs a payday loan. It’s a quick, no hassle way for consumers to secure small, emergency loans, with little or no red tape. They claim payday loans serve an under-served market because neither consumer finance companies nor banks are interested in originating $100 to $500 non-secured loans.

Yes. A payday loan is quick and relatively hassle-free. You write a check to the payday loan people for the loan amount plus fees. (In Arizona the loan can be from $50 to $500 and the maximum fee is 15% of the loan amount.) You postdate the check to the date of your next payday. They give you cash for the loan amount. You agree to either bring in the cash in exchange for your check or allow them to automatically debit your bank account on your next pay day.

There are several problems with this arrangement.

Continue reading your story on the app

Continue reading your story in the magazine

RELATED STORIES

REAL TO REEL

These amazing true stories come alive onscreen

3 mins read
TV Guide Magazine
January 17 - 30, 2022

2022 Preview

Your TV may be on 24/7 this year, thanks to the Game of Thrones prequel House of the Dragon, Jensen Ackles on The Boys, the Winter Olympics from Beijing, plus the return of Law & Order!

10+ mins read
TV Guide Magazine
January 17 - 30, 2022

An exclusive interview with PAUL ZIZKA

Paul Zizka is an international awardwinning mountain landscape and adventure photographer based in Banff, Canada.

6 mins read
Lens Magazine
December 2021

An Intimate, Exclusive Interview With MOUNEB TAIM

After a bloody day, the man walks sadly on a street where more than 80 men have been killed following an airstrike by warplanes.

10 mins read
Lens Magazine
December 2021

An exclusive interview with ORNA NAOR

Orna Naor is a Street Photographer, a lecturer, and one of the main photojournalist activists at the Israeli protests "Siege of Balfour" against Israeli Prime Minister Benjamin Netanyahu.

10 mins read
Lens Magazine
December 2021

An Exclusive Interview With Jean Baptiste Fort

Jean-Baptiste's passion was born in Los Angeles. Since he was 19 years old, he developed an international career in Fashion and Advertising photography.

9 mins read
Lens Magazine
December 2021

Nomads the human essence

They open their hearts in a minute of their lives before a stranger and take their true self abroad, remembering moments from their past and letting their emotions and true essence appear without any taboos.

2 mins read
Lens Magazine
December 2021

Twice As Nice

FENDER DUAL MARINE LAYER REVERB AND DUEL PUGILIST DISTORTION

4 mins read
Guitar World
February 2022

AN EXCLUSIVE INTERVIEW WITH TIM TADDER

Tim Tadder, is an experienced advertising photographer with a niche in sports & fitness productions.

9 mins read
Lens Magazine
December 2021

Separated at Birth

DID YOU KNOW KIRK HAMMETT’S FAMOUS AND HISTORICALLY SIGNIFICANT 1959 GIBSON LES PAUL, GREENY, HAS A SIBLING? AND THAT IT’S OWNED BY HIS FRIEND, GIBSON BRAND PRESIDENT CESAR GUEIKIAN? NEITHER DID THEY! UNTIL VERY RECENTLY...

5 mins read
Guitar World
February 2022