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What Your Children Need to Understand About the Hazards of Payday Loans

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Make money – that’s one concern that most youngsters have nowadays.

But making money is easy; it’s the “how” that matters.


Take the stock market, for instance. People buy something, watch it go up, and think they’ve figured it all out. They start thinking that it’s all so easy. They take the big profit and immediately look elsewhere. But this is actually the time when they should do nothing.

Self-confidence can actually lead to hubris, which in turn breeds arrogance – that is when a young investor should put away all their money in the bank, and turn their attention elsewhere until they’ve calmed down. Because, as they’re going to learn in life, not too many great opportunities come along. However, the chance of slipping up and making a mistake with their finances is ever-present.

That’s exactly what happens when people fall into debt.

The worst part is their credit score takes a hit. That’s when people resort to get-rich-quick offers. What they do not understand is how risky it all this.

Take a look below at what type of dangers these lucrative schemes pose to your financial security, and how you can overcome the situation.

Loans Can be Deceptive

We’re talking about payday loans here. They claim to offer the hard-up with a better source of borrowing, but more often than not, these so-called alternatives are simply providing more of the same.

That’s probably the reason why these lenders are coming under heavy fire with the media and debt charities as well.

Beneath the shiny veneer, payday loan companies encourage consumers to take out loans for short terms at unbelievably high rates of interest.

Payday lenders argue that since the loans are meant to be repaid fast, the APR has less relevance compared to longer loans. Although there still can be find some reliable arp bad credit loans, it is not guaranteed that you will be approve. So, later we will discuss how to increase your credit score.

While this is true, the problems begin once customers miss a payment, and late fees and charges are rolled over to the next month, thereby trapping the borrower in an unending loop of debt. And for a youngster this is the worst possible thing that can happen.

Why Bad Credit Loans are a Bad Idea?

If you’re suffering from bad credit, the loans you want might pose a bit more challenging to secure than you expected.

After all, your credit score determines a lot of the biggest spending decisions in your life – from financing a house to purchasing a car.

However, even if you do suffer from a low score, you should not let that become a deterrent to your ability to move forward in life.

Lack of Security

If you are attempting to improve your credit, a good place to begin is to get a secured card for yourself.

You need to fund the limit of your secured card, but once you build up a solid payment history and show that you’re good with your money, you will eventually be upgraded to a higher status and get an unsecured card in the process.

Even though this process sounds fairly easy on paper, it is quite tough to achieve, and you need to discipline yourself when it comes to monetary matters to ensure everything is in order before you obtain a secured card.

Make Sure You are Reported

There are companies that provide bad credit score holders with prepaid credit cards. However, in many cases, the activities of the buyers are not reported to the major credit bureaus.

This is something you should look into, and it is your responsibility to ensure that your responsible spending decisions go on record.

While you are on the lookout for a credit card, make sure you learn whether your payment history is going to be monitored by consumer credit agencies.

However, you should exercise caution while applying for prepaid debit cards. There are some that offer cardholders the chance to secure a debit protect loan, that effectively transforms the prepaid card into nothing more than a credit card.

Thus, someone who means to use such cards as a way to avoid taking out credit could eventually find themselves owing money – a lot of it. So, not only can you be lured into using credit, but the credit can cost you dearly thanks to the tacked-on high APR.

Even if you’re reeling under the pressure of bad credit, there are certain loans that can be granted to you.

All you need to do is be willing to accept more stringent terms and conditions, and adopt the steps necessary to build up a good credit score. A few of these are given below:

  • Check Your Credit Reports: As we mentioned earlier, you need to ensure you are reported. However, that’s not enough – you also need to make sure that you check your credit report from time to time to weed out any fraudulent activity or errors that keep your credit in the dumps.
  • Make More Timely Payments: Make sure all your bills are paid in time. This helps raise your credit score. Also, make it a point to pay out in small amounts more frequently. This is helpful as it shows you aren’t relying on your available credit.
  • Never Use Too Much of Your Available Credit: Always maintain your credit utilization ratio between 10 percent and 30 percent. Otherwise, it can have a negative impact on your credit score, despite you paying off your balance each month.
  • Try Not to Close Your Accounts: Keep your account open even if it’s not in use. Having credit that is unused is always good for your credit score. Keep your account active by using it to pay small bills occasionally. Keeping the same account open for many years also positively affects your credit history, and ultimately your score.

It is easy to become frustrated, especially when dealing with rejections for credit loans.

However, you should never give in to the temptation of company offers that advertise the ability to fix your negative credit history. Whenever you opt for a “quick fix” for your credit history that is already under the burden of various problems, things are bound to go awry.

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