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The dangers of payday loans

Most Wisconsin residents have faced financial challenges at some point in their lives. This can happen when a medical condition unexpectedly arises, one loses his or her job, or if one's income is not enough to cover the day-to-day expenses of life. Regardless of the particular circumstances faced by these individuals, one thing is often clear: they need money, and they need it fast. When this is the case, Wisconsin residents might be tempted to turn to payday loans.

Though payday loans promise immediate financial relief and portray themselves as temporary fixes, the truth of the matter is far different. Payday loans often have excessively high interests rates, sometimes reaching 1,000 percent. This can make it extremely difficult to pay back the balance. In fact, almost half of all payday loan borrowers default on their loans within two years. Also, despite the quick fix mentality of this industry, two-thirds of payday loan borrowers will actually acquire six or more payday loans within a year. In some cases, loans are taken out to pay off older loans.

There are other options that an individual can turn to before going the route of the payday loan. Many professional organizations, for example, provide low-interest short-term loans to help out those individuals who find themselves in a financial bind. It might also be possible to get a cash advance from an employer. Another option is to seek out a loan from family members or friends.

Unfortunately though, far too many Wisconsin residents are already trapped in the payday loan cycle. Those whose financial situation has gotten worse thanks to these loans may need to seek out a fresh financial start. By speaking to an experienced attorney, these individuals may be able to learn if bankruptcy is right for them.

Source: NerdWallet, "Don't Get Caught: The Payday Loan Trap," accessed on Nov. 9, 2015

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