Sister wants to know: Payday loan or overdraft protection?

[Mide]

41? Seriously. Tell her to start posting up stuff on Craigslist to get some cash. Don't do the payday loan thing...those companies should not be allowed to exist.

 

[blackangst1]

Get the overdraft fee. Payday loans can be as high as 90%. Seriously.

Not for one 2 week transaction they arent.

*IF* she pays back the payday loan in full and doesnt get it again, it would probably be cheaper than the OD scenario. The only disadvantage is her having to fill out the application and most likely have to list a few friends/reletives as references.

 

[EagleKeeper]

Just pay it a couple days late. No big deal.

She may hit a late payment date by Friday

 

[Whisper]

I might be wrong, but didn't one of those new credit card laws require that CC companies now apply payments to the balance with the highest APR (usually cash advances) first?

I know they used to apply it to those balances last, but I could've sworn I had heard they'd recently changed that.

 

[Locut0s]

29 posts and no one asking for pics of sister? You disappoint atot.

Overdraft sounds like the better option.

 

[cerebusPu]

i think both those options have ridiculously high short term interest rates. if possible she should pay the bill with a credit card (unless its a credit card bill), or write yourself a check from credit card cash advance. Or have you or her paypal herself some money using a credit card. all these options give her a 30day grace period. if none of these options are available, just pay the bill late 2 days.

 

[CZroe]

Thanks for all the advice, guys. The reason she can't delay the payment is that she is enrolled in auto-pay and it's too late to cancel it. It is coming out today one way or the other.

FWIW, she may be 41 but she only recently graduated UCSD and is saddled by student loans. Of course she hasn't started savings if she hasn't started a career yet.

I might be wrong, but didn't one of those new credit card laws require that CC companies now apply payments to the balance with the highest APR (usually cash advances) first?

I know they used to apply it to those balances last, but I could've sworn I had heard they'd recently changed that.

They only apply what you pay OVER the minimum, which isn't usually much.

 

[Modelworks]

Pawn shop. They are the best way to borrow small amounts without worrying about credit concerns. Here you can borrow $100 and pay it back up to 30 days later for $8

 

[coldmeat]

I also came in to suggest pawning something

 

[AgaBoogaBoo]

Payday loans and anything having to do with companies like Cash America are basically (unbelievably legal) predatory lending institutions that prey on those who can least afford credit ... the poor.

I don't know your sister or her situation but tell her to keep her money in her purse and DO NOT ... I repeat DO NOT take out ANY payday loans.

Don't let her become a victim ...

On an annualized basis, it is very high, but looking at the short period of time that it's for, the cost isn't too bad IMO. The idea is to be "better off" and so she'll use the service if she's better off with it or not if it makes her worse. I don't think these companies are as evil as you make them out to be - they know the value that they provide and want to be paid for it, they're not running a charity, plus they face a lot of risks because they're already lending to risky clientele. If you think there is a better way to run it, there's a lot of money waiting to be made.

 

[Mr. Lennon]

Thanks for all the advice, guys. The reason she can't delay the payment is that she is enrolled in auto-pay and it's too late to cancel it. It is coming out today one way or the other.

FWIW, she may be 41 but she only recently graduated UCSD and is saddled by student loans. Of course she hasn't started savings if she hasn't started a career yet.



They only apply what you pay OVER the minimum, which isn't usually much.

What did she do for the 20+ years she wasn't in college? Man I couldn't imagine graduating at age 41, in this economy, and with a boat load of student loans. I wish her the best.

 

[ShawnD1]

Credit cards would further drive her into debt.

So?

Has anyone actually gone through the calculation of how cheap a credit card is?
overdraft = $30 fee for going $100 over the limit for a month (360% interest/yr)
payday loan = $30 fee to borrow $100 until payday (360% interest/yr)

My credit card is a Visa Green card and the interest on cash advances is 20% yearly, there's no grace period at all (buying stuff with a CC has a grace period). Let's assume they compound it daily and you pay 30 days worth of interest on a $100 advance.
100 * (1 + 0.2/365)^30
--> 100 * 1.016569
= $101.66

Cost to borrow $100 from your credit card company is $2, two dollars.
That actually does make sense if you think about it. 20% yearly interest, so that's like 1.66% monthly interest. 0.0166 * $100 would be $1.66


Credit cards are awesome. You can borrow $100 and they'll only ask for $102 back at the end of the month. How many of your asshole friends would do that?
"Sure bro, I'll lend you $100 but I want that money in a week and I want you to buy me a beer too"
(beer at a bar is a hell of a lot more than $2 up here)

if possible she should pay the bill with a credit card (unless its a credit card bill)

Actually yes you can still use your credit card to pay your credit card bill. Don't do that unless you absolutely need to, but you can if you want. The minimum payment on a credit card is something like 3% of your total balance or X dollars, whichever is higher (I think my minimum is $5 no matter what). As stated, you use your credit card to take out a cash advance, then you make the minimum payment on the credit card using the money you just borrowed from them. It sounds like you're scamming them, but they love it when people do this. It just means you owe them more on the next bill

 

[EagleKeeper]

What Shawn states is fine; if you do not get hit with a cash advance fee. And if you do now get all the balance paid off; the interest on the cash advance charges proportionally to the rest of the balance.

 

[sourceninja]

In this case, I would also recommend a pawn shop.

 

[highland145]

Pay day loan, FTW.


Ignore the other bad advise.

/thread

 

[Vette73]

Pay day loan, FTW.


Ignore the other bad advise.

/thread

Hahahahahahahaaaa....

 

[highland145]

Come on, Marlin. Licensed, regulated and provide a valuable/needed service. What's not to like?

 

[Texashiker]

So?

Has anyone actually gone through the calculation of how cheap a credit card is?

The lady already owes money she can not pay back, but you want her to use a credit card that could start charging her interest?

Credit cards are for people who can pay their bills, not for those that can't.

 

[Scotteq]

Get the overdraft fee. Payday loans can be as high as 90%. Seriously.

This


Bank Fees may be an annoyance, but payday loans are a true example of Financial Sodomy.


{edit} Kind of late now, but it is a good idea to arrange for a Line of Credit through your bank. A common arrangement is for it to be attached to your checking account. With one - instead of an Overdraft (and the attendant fees) the Bank automatically floats a loan to cover it.

 

[Cogman]

pretty much anything that isn't a payday loan is a better idea. While not the best, getting a credit card is better than going into debt with a payday loan.

Pawn something off in the short term, cancel stupid fees for the long term. No more gym membership, get a slower internet package (or no internet, there are lots of public places available now). Cancel the cable subscription, etc. She needs to get her life in order, 41 and struggling for cash is not a good sign.

If she is unwilling to cut back services, then she needs to get a job, no matter what it is. Go work at mcdonalds or walmart.

 

[Bignate603]

The lady already owes money she can not pay back, but you want her to use a credit card that could start charging her interest?

Credit cards are for people who can pay their bills, not for those that can't.

Credit cards are also great for EXACTLY what the OP is describing. Borrowing money for a few days or weeks to pay for an emergency because you're waiting for other money to come in is a great way to use credit cards. Like Shawn pointed out, a good credit card would probably be the cheapest way to get the money for a few days, even cheaper than pawning.

 

[Genx87]

This is why you dont do auto-pay on a bank account. Credit Card is fine as it will give you 30 days to pay it off. Drives me crazy the access people give faceless companies to their money.

 

[ShawnD1]

What Shawn states is fine; if you do not get hit with a cash advance fee. And if you do now get all the balance paid off; the interest on the cash advance charges proportionally to the rest of the balance.

You'll need to read your CC contract for more info about fees related to this. For my particular card, there's no direct "fee" for cash advances. The interest rate is 2% higher than regular CC purchases. While CC purchases have no interest if paid on time, cash advances have interest no matter what.

There is also some kind of transaction fee related to using an ATM to get money out of a credit card. Around here that would be about a dollar from a bank owned ATM or as much as $5 if using one of those ATMs found in bars.

 

[highland145]

She could also try a title loan if she has a car. Their rates are very competitive, too.

 

[pcgeek11]

Never use a payday loan. Unless you want to get screwed.