Capital Management

Sometimes you have just got to have cash. Credit cards are great for those everyday purchases but what if you need cash and you need it in a hurry? Instant approval Payday loans sound like the perfect solution.

You could ask for a cash advance on your credit card, but some cards have a limit on how much and how often you can get an advance. And of course you pay a processing fee, cash advance fee and interest fees. And you may not have enough available credit to get a cash advance.

Pawning valuables is another alternative. You’ll get the cash quickly but you won’t have the use of whatever valuable you’re pawning and you’ll only get less than 10% of the value of the asset. If you have a watch that retails at $5,000, you may only get $150 in cash. If you don’t pay pack the $150.00 plus interest in the time period allowed, usually 90 days, you forfeit the watch.

Another alternative is a payday advance loan. This works if you have a steady job with a reliable paycheck. There’s a quick application process, sometimes online. You do have to pay interest and a processing fee. The money is transferred to your bank account almost immediately. When you get your paycheck you pay the advance back.

The problem with payday loans is that you have to pay the money back in a short amount of time. If you don’t have the $250 you borrowed today where are you going to get it in two weeks when it’s due? So you pay another application fee and roll over the loan for another two weeks. The application fee may seem minimal, maybe only 10% of the loan amount, but that’s $25 on our example. If you have to keep rolling the loan over for 6 weeks, you’ve just paid $75 to borrow $250 for 8 weeks. If you don’t pay the money back for 6 months you would have paid $300 plus you’d still have to pay the $250 back. Plus of course you have to pay the interest owed, which most likely will be as high as your state’s usury laws allow.

You’re probably telling yourself that you’ll just not pay the additional processing fee and pay the loan back when you can. Unfortunately the lender will require your bank account number and permission from you to electronically debt your bank account automatically for the processing fee and loan, if you don’t pay pack the loan in time. Other lenders require that you write a check for the loan amount, interest and processing fee and post date it to when the loan is due. If you don’t have the money in your account and the check is returned for insufficient funds you are liable for returned check fees.

Payday loans should be a last resort, it’s easy to end up owing $1000 for borrowing $250.

Tips to get out of debt Dee Power is the author of several nonfiction books, and the novel, “Over Time.” Get your free credit report and scores