Are the alternatives to payday loans really alternatives?
Many states have begun to try to ban payday loans from being available to their consumers. They suggest that there are alternatives to payday loans that can be used that will suit the same needs and be less costly. The alternatives suggested are:• Credit cards
• Cash advances from your employer
• Loans from family and friends
• Overdraft protection
Many well-meaning people who have never been in the situation of living paycheck to paycheck with no credit history and an unstable job economy do not understand that these alternatives are usually not available to low-income people struggling to make ends meet.
Credit Cards
Anyone with any sense knows that to get a credit card with a low APR you must have a good credit history. Many people who rely on payday loans do so because they either have a poor credit history or none whatsoever. Credit cards are not an option.Cash Advances From Employers
People who work paycheck to paycheck are typically in industries that handle cash on a day-to-day basis. Restaurants and other service businesses want employees who can be trusted around cash. The last thing an employer wants to hear is that you are having financial difficulties because it makes the employee seem less trustworthy.Loans From Family and Friends
If you are low-income, odds are your family and friends may not be in a position to help you out by lending you some extra cash. While it's true that borrowing from friends and family is better than taking out a high-interest loan from a business, it may not be so for your support system if the debt goes unpaid. That's why many people prefer to keep financial matters on a business level and not involve friends and family who may be struggling with financial matters also.Overdraft Protection
This is a wonderful service for people and should be used whenever possible. But, most overdraft protection is paid back very slowly and once a limit is reached, it can't be negotiated further. Payday loans, on the other hand, can come in handy as an additional tool to overdraft protection when that limit is reached.Contributing National Staff Writer
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