Why to Steer Clear of Payday Loans

Publication: The Wall Street Journal

Author: Jennifer Waters


07/29/2012 - Payday loans are meant as a stopgap for the fiscally pinched. But in many cases, these short-term loans create a costly cycle of escalating debt.

A payday loan is like a cash advance on your paycheck. Marketed as a temporary solution to a short-term setback like car repair or emergency medical issues, these loans are typically expected to be paid back in two weeks, the usual pay cycle.

But what happens, a recent study by the Pew Charitable Trusts found, is that most borrowers—some 69% of first-time borrowers—need the money not for a crisis but for everyday necessities. That leads to repeat loans.

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Read the full article, Why to Steer Clear of Payday Loans, on the Wall Street Journal's website.

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