Reverse of the Payday Coin

However, far not all of those ever speculate on how they are going to pay back. This gives free rein to lenders, especially, in the states that do not anyhow limit maximal sums to charge. As for debtors, they are dramatically likely to find themselves in a trap.

A Snowball

Although the very idea of a payday loan presupposes quick liquidation, it is not always possible in practice. Unless able to repay as they fall due, the borrower can reschedule the loan with a new interest. At first sight, the latter is reasonable enough, namely, between 15 and 30 per cent. Yet providing a short-term loan is rolled over for several times in a row, the initial sum has a considerable potential to multiply. Regarding interest rates on annual scale, the experts proclaim that, on average, they equal 400%, while the maximum has reached 2100% so far.


The foregoing numbers sound threatening, but that does not imply complete unacceptability of payday loans. That determines essentiality of additional care and competence for whichever borrower.

The first recommendation obviously follows on from the above and lies in giving preference to the lenders with the lowest interest rate. Taking into account how numerous they are nowadays, this does not appear to be a challenge. Another inference is conviction that payback is not going to be problematic. In other words, the borrower should assess the own paying capacity appropriately and avoid taking a loan in case of any concerns.

In addition, it is irrational to provide the lender with a bank account number. Its possession allows automatic money transmission. Despite repayment facilitation, it is sometimes done as a series of withdrawals with a fee for each one. As a result, the original amount grows again.


In fact, the most effective tool for eliminating the unwanted consequences is to consider payday loans as the last resort. Sources of money are numerous, depending on particular amount and urgency.

In the first instance, the majority have helpful friends as well as belongings to sell.

Possession of a credit card is relevant either, since its interest rate is significantly lower versus a loan. In whole, it is always more secure to appeal to a reliable bank or credit union rather than a random lender.

Finally, the modern labor market offers a variety of commonly available side jobs that do not require specific qualifications. Those are, for instance, babysitting or cleaning.