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Ask the Experts

Ask The Experts

Should I use payday loans to catch up on bills?

I'm trying to catch up on bills, feed my family, and find a place for us to live (staying with family at the moment). I just got a decent job, so are payday loans a temporary option? I'm worried and running out of time. -Steve

Dear Steve,

I know you are facing financial trouble right now; however payday loans are a very costly solution. Here’s how they work: let’s say you wrote a personal check for $330 to borrow $300 for up to 14 days. The lender would agree to hold the check until your next payday. At that time, the lender deposits the check, you redeem the check by paying the $330 in cash, or you roll-over the check by paying a fee to extend the loan. In this example, the annual percentage rate (APR) is 260.71 percent!

Instead, you might want to contact your creditors and ask them about a temporary hardship program. Many creditors offer such programs for people in your situation. Finally, I recommend researching any and all assistance offered by your city of residence. You may also get help from your local United Way.

The Advice Team
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