Payday loans can be dangerous forms of credit.
Interest rates are astronomically high (according to an FDIC advisory, between 300 and 1000 percent when calculated annually), a significant number of payday loan customers take out multiple loans per year, and itâ€™s difficult to determine a legitimate company from a fly-by-night business front.
Many customers get trapped in a never ending cycle. By the time the loan comes due on the next payday (along with an additional $1.50 to $2 for every $10 borrowed), the customer canâ€™t afford to repay the loan and pay his current bills. He then takes out another payday loan for just a bit more.
When one loan company stops extending credit, the customer moves to the next, borrowing to pay off the first. Nothing about this sounds good or appealing, right?
Interest rates as high as 1,500% per year (that's One Thousand Five Hundred percent per year, and yes, we've seen them this high).
Repayment terms that lock you into an endless cycle of borrow and pay that you can never get out of.
Abusive collection practices.
So why do people borrow money from people like this on such outrageous terms? Because, as one blogger put it, "When the landlord is pounding on the door demanding rent, the kids are crying because the kitchen is empty, and the electric company is hauling the meter out of the house for non-payment, what would you do?"
Well, what can you do other than using a payday lender? The answer? Check with a credit union.
According to the Bible, it it moral to file for bankruptcy? Recent studies have shown that the average American family is only three weeks away from personal bankruptcy. So it is time to revisit what the Bible teaches us about debt.
The Bible makes it clear...