USA Today pay day loans alternatives article is misleading

Interest groups for the traditional banking regime would have you believe that there are numerous cheap payday loans alternatives. People with good credit have a wide variety of choices for cheaper short term loans, but those with credit constraints will likely discover pay day loans to be a better option. USA Today’s recent piece on pay day alternatives is an additional sad example of the misinformation that poisons the public view. The newspaper’s musings are something more than cheap.

Resource for this article: USA Today paydayloans alternatives article is misleading by Personal Money Store

Pay day loans alternatives: 401(k) loans lead the pack

Getting 401(k) loans as one of your payday loan alternatives could be a terrible idea. A borrower can conceivably take up to $ 50,000 or half of what’s in a plan (whichever is less) at low interest without a required credit check. But as The Money Alert warns, “You can’t contribute again until you repay”. Your retirement savings (more vital today than ever, considering the recessionary economy) can take a big hit. And don’t forget that employer matching shuts down when you are repaying.

Here’s something else you’ll lose: take home pay via payroll deduction. That may work, unless you lose your job. Then you will have to pay it all back in 60 days. You’ll face penalties and the potential of having to file in a higher, more expensive tax bracket on your next return. Indeed, the sting will be felt. A real option is in fact paydayloans, which both the University of Michigan and the Federal Reserve have shown to be a proven inexpensive option to loan shark use. They’re also much better on a small scale than 401(k) loans.

No. 2: What about credit card cash advances?

USA Today strikes out again with this effort at exposing payday loans no fax alternatives. Credit card cash advance loans via special blank checks is convenient, but also quite messy. To start with, the cash advance APR is multiple percentage points higher than what your credit card company charges for regular purchases. Second, if you use an ATM to obtain a credit card cash till payday, you will find additional fees. Thus, as Young Money suggests, it is vitally essential to look over terms and conditions of a credit card so you know what you are getting into, first. Using payday installment loans without pulling out the plastic is a better idea. Furthermore, you cannot pay the balance of your credit card cash now until after you have paid off every other charge on the card (the ones with a lower APR).

Banks and credit unions offer small loans

Knowing your credit history is quite significant in this scenario. As outlined by USA Today, bank and credit union small loans are great when you have the credit for them – but numerous individuals do not meet the criteria. In the case of paydayloans, they can even be used in conjunction with a consumer’s efforts to repair credit. Those with less-than-perfect credit should explore the possibility, something the USA Today apparently neglected within the process of researching their story.

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USA Today

usatoday.com/money/perfi/columnist/block/2010-06-15-yourmoney15_ST_N.htm

The Money Alert

themoneyalert.com/401kloan.html

Young Money

youngmoney.com/credit_basics/040216_01/