Consumers are being warned against payday loans as a first resort. Consumer advocates are advising them to acquire loans through credit cards, banks, and credit unions. If those avenues are not available then use payday loans very carefully. Michael Calhoun is the president of the Center for Responsible Lending. The Center for Responsible Lending recently issued a report disclosing the debt statistics of payday loans. “There are presently wide arrays of financial alternatives that are far less costly to payday loans, even if you take a simple credit card loan or cash advance. The most expensive credit cards usually have rates that are far less (than payday loans). Equally important, they give the borrower a chance to pay the loan back over time rather than this lump-sum payment in two weeks,” said Calhoun. Jean Ann Fox, director of consumer protection for the Consumer Federation of America, is in full agreement with Calhoun on the issue of payday loans. “A study that the industry backed… indicates that only 6% of payday loan customers say they have no other alternative for getting credit.” Fox acknowledged, “The payday loan may be the easiest thing to do. You write a check and you walk out the door with cash.” But she went on to say, “There are other alternatives, and mainstream financial institutions can provide them.” She warned consumers who may be considering them, payday loans “have to be repaid all at one time. They are balloon payment loans. Families who are already having trouble making ends meet are unlikely to be able to repay the loan in full.”

Source: paydayloansabc.com