Payday lenders all over the country are using the technology of the Internet to move their check cashing stores from the street corner to the World Wide Web. The Internet gives customers the relaxation of getting payday loans in the comfort of their own homes. But, there are many catches to be aware of when it comes to these companies.
According to BankRate.com, these sites require a startling amount of personal and financial information. They require your Social Security number, a drivers license number, your mothers maiden name, a home address and employment information. You also have to give them your checking account and bank routing number.
The most important part to watch out for is giving them your bank account information. By doing so, these lenders have access to your account and may make unauthorized withdrawals and say they are collecting owed funds. In some instances, these online payday sites are not even in the United States. Many are in the Caribbean islands, Canada and elsewhere around the world. So, there is no way to track these companies down if they make unauthorized withdrawals.
According to Consumer Federation of America (CFA), loan borrowers are typically hit with a 650 percent APRs. Most of these sites can cost up to $30 per every $100 borrowed. The growth of these payday loan sites are astronomical and causing major problems with law enforcement officials.
About.com states many surveyed lenders automatically renew loans by electronically withdrawing the finance charge from the consumers checking account every payday. If consumers fail to have enough money on deposit to cover the finance charge or repayment both the payday lender and the bank will impose insufficient funds fees.
In order to avoid using these types of companies, people are urged to seek payday advances from their employer, put off purchases, put a percentage of money into a savings account every pay check and create a budget.
Pete Glocker is employed in the Education and Charitable Services Department at Debt Management Credit Counseling Corp. (DMCC), a 501c(3) non-profit charitable organization located in Boca Raton, Florida. Pete graduated from Florida Atlantic University with a BA in Multimedia Journalism and is an experienced web producer for Tribune Interactive products Sun-Sentinel.com and SouthFlorida.com. DMCC provides free financial education, personal budget counseling, and debt management plans to consumers across the United States. Debt management plans offered by DMCC help consumers relieve the stress of excessive debt by reducing credit card interest rates, consolidating and lowering monthly payments, and stopping collection calls and late fees. DMCC financial counselors can be reached for free education materials, budget counseling and debt management plan quotes by calling 800-863-9011 or by visiting dmccorp.org Pete Glocker can be reached by email at pete@dmcccorp.org
