As recently reported, the United States’ are looking into their instant cash loan industry, for the states which allow it, as it is now seriously concerned about the number of its citizens falling into debt traps. As such, they are warning their citizens about the dangers and pitfalls of falling further into financial hardship, highlighting the fact that many Americans have, like UK citizens, have relied on credit for years. Now that well has run dry and it’s time to pay back what they’ve borrowed, it’s an uphill struggle that many thought they’d never have to face. For some reason.
In order to get Americans back on track, one advert for a debt settlement firm has proffered the top five mistakes that individuals make when they think they are helping to solve their debt crisis but are actually making it worse. Strangely enough, four out of those five mistakes could be partly, if not totally, eradicated with the help of short term loans. Perhaps, conversely, the problem would not be so bad if they had, in The States, access to as many online instant cash loan providers as we do here in the UK.
The first recommendation is to stop paying just the minimum requirement on your credit card bill as you are eating into your actual debt by very little doing this. Even worse is to miss a payment, altogether. The interest accrued by missing a payment can be more than the one-off payment due on a short term cash advance.
They also suggest leaving friends and relatives out of the equation, which is excellent advice. Not only could lending money ruin relationships built up over a lifetime, but also the temptation is not to pay it back at all as ‘they will understand’. With an instant cash loan, the amount and dates are set, so you not only guarantee making that payment but you start to regain the habit of making regular commitments to solving your financial issues.
Using debt consolidation where the loan you are taking out to put all of your debts ‘under one roof’ has a higher APR (because of your credit risk) than the majority of the individual loans you have taken out in the past may make repayments more convenient but is actually increasing the amount you owe, rather than reducing the debt.
One of the reasons may be prevalent in the US, but perhaps not so in the UK and that’s to pay a cash advance to a ‘debt counsellor’ who only makes matters worse by having it away with the sum you’ve managed to scrape together for their never-appearing services. Online payday lenders do not charge a fee for their service upfront but make their money on the agreed level of interest set at the time you decide how much you want to borrow and over what period you want to repay.
And the last no-no on the list is to declare bankruptcy. It may seem like the only viable option, but the long term effect on your credit rating is often irreversible. On the contrary, regular on-time payments towards a short term or instant cash loan can repair your credit history.