Why Are Payday Loans Potentially Dangerous

Payday loans can, if you aren't careful, trap you in a vicious circle of debt. Payday lenders tend to prey upon those who are least able to afford their high fees, and many customers end up rolling their loans over. There's no way to hold the lenders accountable, and no way to keep customers from getting into debt. Most customers use the service more than once, and instead of making ends meet, they end up in debt that they can never get out of. Here are some reasons why payday loans are particularly dangerous.

1. The interest rates are so high that not even the wealthy can afford to pay them- and they usually aren't disclosed until the customer takes the loan.

2. Not all payday lenders allow their customers to roll their loans over, nor do all states. But, if a customer lives in a place where this is the norm, they are often quickly tempted into extending their loan's terms, resulting in mounting fees and everlasting debt.

3. Once users see how easy it is to get quick cash, they see it as a long-term solution. Most lenders tout their services as "emergency funds" or "quick cash", which can lull borrowers into a false sense of security, and they end up going back when they obviously cannot afford the fees.

4. Others may become aware of your financial status if you do not pay your loan on time. Most lenders ask for your employer's phone number, as well as names and phone numbers of references, and they WILL call them to try to collect.

5. Getting payday loans can damage your credit. If you are just barely staying out of debt, taking a payday advance can ruin what little credit you do have.

6. Most people don't ask questions until they're in trouble. Once a borrower realizes that they're paying the same money over and over, they begin to wonder about the ethics of the service. Some states, such as Maryland, Georgia and West Virginia have banned payday loans, enabling Internet sites to step in and offer the service.

7. Sometimes borrowers close their bank accounts in an attempt to keep the lender from collecting, because of their frustration at having to pay the same loan over and over. This tactic does not work; in most cases, the lender will serve court papers.