Avoiding Payday Fees
Playing It Safe: Steering Clear of Bank Overdraft & Late Fees
The average payday loan borrower has enough on his or her financial plate without adding bank overdraft and late fees on top of that. Tackling existing monetary difficulties without compounding the situation with accumulating debt requires effort, frugality, and good judgment on the part of the cash-strapped consumer. By avoiding the consequences of NSF (non-sufficient funds) and late fees, customers seeking instant cash loan can save themselves a lot of money, stress, and anxiety. Here are some ways that short-term loan borrowers can prevent the assessment of such fees against them and safeguard their bank account and reputation:
1. Negotiating with the payday loan provider
Customers should discuss with their cash advance lender the necessity of a new arrangement consisting of installment payments. In some states (Florida, Oklahoma, Michigan, Washington, Nevada, Alabama, Illinois, and Alaska), creditors are required to offer extended repayment options. If consumers find themselves unable to arrange for a new payment plan with their instant personal loan provider, they should consult their state regulator for guidance.
2. Ensuring that there is money in the bank account
Borrowers should refrain from writing checks if the funds in their checking account that day are insufficient to cover the check. Furthermore, they should only request a loan amount that they can afford to repay when they receive their next paycheck.
3. Heeding the banker's advice
The bank might recommend borrowers to close their account and open another one in order to 1) get a grip on loan payments and 2) put an end to NSF fees resulting from several attempts by the creditor to collect on the check.
4. Stopping payment to the cash advance lender-
At least three days before the loan's due date, customers can ask their credit union or bank to stop payment on the check utilized to obtain a payday loan. This will afford them more time to negotiate a repayment plan. An oral request by a borrower to the bank that the latter stop payment is good for 14 calendar days; a written notice must be submitted afterwards. The duration of a stop order is usually six months. Unless state law prohibits consumers from stopping payment and/or closing the bank account, they should consider this remedy. The payday loan industry requires online creditors to state that borrowers are entitled to withdraw authorization to debit a checking account and to provide instructions on how to do so. The loan agreement's fine print will usually inform clients of the means and the place to stop online access to their bank account. Pursuant to rules of the cash advance industry, borrowers must first inform their provider and then their bank that they are revoking authorization.
5. Obtaining overdraft protection
Overdraft protection is a mechanism enabling payment to be effectuated and a bounced check to be avoided. Consumers can find checking accounts with overdraft protection at most banks, which will charge a fee as low as $5 to cover checks by transferring funds from a savings account. To prevent bounced checks, borrowers can purchase an overdraft protection via a savings account, a credit card, or a line of credit, averaging at 10-18% APR (annual percentage rate). Another advantage of obtaining overdraft protection is that it prevents instant cash loan lenders from finding out that the individual is financially squeezed and consequently protects the borrower's reputation.
6. Seeking credit counseling
Another way to avoid NSF and late fees is to consult a credit counseling agency, which provides such services as debt management plans (DMPs), budget planning, and financial guidance. Borrowers can find a listing of established agencies through the National Foundation for Credit Counseling. Credit counseling will help borrowers develop an effective savings and spending plan.
7. Shopping around for low costs payday loans with attractive loan terms
Consumers should invest time in searching for cheap payday loans boasting the lowest APR and finance fees.
More Payday Loan articles: