Why to Steer Clear of Payday Loans
Payday loans are meant as a stopgap for the fiscally pinched. But in many cases, these short-term loans create a costly cycle of escalating debt.
A payday loan is like a cash advance on your paycheck. Marketed as a temporary solution to a short-term setback like car repair or emergency medical issues, these loans are typically expected to be paid back in two weeks, the usual pay cycle.
But what happens, a recent study by the Pew Charitable Trusts found, is that most borrowers—some 69% of first-time borrowers—need the money not for a crisis but for everyday necessities. That leads to repeat loans.
Read the full article at online.wsj.com.