Our privacy policy has changed. By using this site, you agree to the Privacy Policy and Terms of Use. Dismiss

Fast Cash For Holidays Could Cost You Later, BBB Advises

Dec. 20, 2013

Many cash-strapped consumers may find themselves in need of a loan this holiday season. The Better Business Bureau Serving Wisconsin (BBB) advises consumers to be aware that many payday lenders charge high interest rates, set unaffordable payment terms and use high-pressure collection tactics that can make these debts impossible to pay off.

A 2013 study by the Consumer Financial Protection Bureau shows that payday loans’ interest rates averaged 339 percent. In Missouri, payday loans averaged more than 400 percent, according to state finance officials, and some rates exceeded 1,000 percent.

Payday lenders tend to target people whose credit may not be good enough to obtain a credit card or bank loan and who therefore rely on advance short-term loans to get by. What most borrowers don’t realize is that the high interest rates on these loans can trap them in a debt cycle that forces them to renew the loan repeatedly, paying associated fees every two weeks until they can finally save enough to pay off the principal and get out of debt.

Before you decide to take out a payday loan, consider alternatives such as small bank loans, credit counseling and credit cards. For those without these options, BBB offers the following tips:

Start with trust. Check out a lender’s BBB Business Review to see its rating, history of complaints and other information.

Never pay an upfront fee. Some short-term lenders ask for a post-dated check to cover the amount you borrowed plus interest and fees. However, if any lender asks for those fees in cash before giving you any money, walk away — especially if it’s an online lender asking for money via wire transfer. Charging undisclosed upfront fees is illegal, and cash sent by wire cannot be traced.

Limit the amount you borrow. Only borrow what you know you can pay off with your first paycheck. Most companies will allow you to roll over the balance for several weeks or months, but they tack on fees each time you roll it over. This can result in you owing several times what you borrowed in the first place.
Read the fine print. Pay close attention to fees and consequences of nonpayment. Will the company allow you to make arrangements if you cannot pay?

Keep your documentation. Many consumers said they started receiving calls from collection agencies years after they paid off a payday loan. Some of these calls were simple errors; others were attempts by scammers to collect a debt that is not owed. Protect yourself by having documentation that all loans were paid in full.

Know where to turn. If you feel a lender has committed fraud or taken advantage of you, file a complaint with BBB, the FTC and the Missouri or Illinois Attorney General, depending on where you live.

For more advice on being a savvy consumer this holiday season or to find BBB Business Reviews of businesses or charities, go to Wisconsin.bbb.org.

Community Watch

» With peers downsizing, couple takes on ultimate fixer-upper 5/28

» Name revealed of new female giraffe at Milwaukee Co. Zoo 5/26

» Wauwatosa law enforcement honors fallen officers during national bike tour Updated:  5/26

» Tosa Top 5: Five things you need to know about in Wauwatosa this week 5/25

» Wauwatosa West boys finish fourth at Woodland Relays 5/25

» Wauwatosa West girls soccer team wins Woodland Conference championship 5/25

» Wauwatosa East soccer team splits two games, loses Lily Brock to injury 5/25

» Wauwatosa East girls finish seventh at GMC Outdoor Track and Field Meet 5/25

» Wauwatosa East boys fourth at GMC Outdoor Track and Field Meet 5/25

» State Street road work may be the biggest headache this year in Wauwatosa 5/25

» Wauwatosa Sports Notes: May 26, 2016 5/24

» Milwaukee County Chargers defeat Bulldogs in exhibition opener, 20-6 5/24

» Wauwatosa officer rescues seven ducklings trapped in storm sewer 5/24

» Initial Reaction: Talking with star Waukesha soccer players Dani Rhodes, Emily Cervantes Updated:  5/24

» Wauwatosa Police Report: May 15 - 21 5/24

» Wauwatosa West girls track team runs away with Woodland Outdoor title 5/24

» Video: Reporter takes us along the 2016 Run Tosa Run 5/23

» Tosa Top 5: Five things you need to know about in Wauwatosa this week 5/20

» Suspects charged in string of armed robberies through Wauwatosa, Milwaukee Updated:  5/19

» New Mayfair GM announces plans for a Z Gallerie furniture store Updated:  5/18

» Wauwatosa East baseball team will rely on defense, depth in 2016 5/18

» Wauwatosa East softball teams beats West Allis Central in twinbill 5/18

» Campus News: May 19 5/18

» Sports Shorts: May 19, 2016 5/18

» Wauwatosa East girls soccer team crushes West Allis Central, 11-0 5/18

View All Posts Got a tip? Welcome rss

Best Summer Ever

 

We've made it easy for you to get out and go this summer. From hitting the trails for a bike ride or walk, to where to find beer gardens in the area, to the best places to swim in Waukesha County to the best summer drinks and summer reads, check out our 2016 summer guide.

Advertisement

Advertisement

Hidden Tosa

 

"Hidden Tosa" is a semi-regular feature where our Wauwatosa reporter explores the closed down and closed off parts of Wauwatosa.

Advertisement

CONNECT