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Credit cards have become a staple in today’s society

There’s not much you can do without one. It’s nearly impossible to rent a car, book a flight, or reserve a hotel room without a credit card. Unfortunately, consumers with new credit and those with bad credit may have trouble getting approved for a regular credit card. Credit card companies see these two types of consumers as riskier than others. Fortunately, people who can’t get a regular credit card can take advantage of a secured credit card to begin building or rebuilding their credit.

A secured credit card is a credit card that has a credit limit backed by a security deposit. The deposit is placed into a savings account and acts as collateral for the credit card in the event of nonpayment. The amount of your deposit determines the credit limit you’ll get. Secured credit cards give you a credit limit that’s between 50% and 100% of the deposit you make. Ideally, you want 100% of your deposit to go toward your credit limit. After you’ve opened the card, you may be able to increase you credit limit by making additional deposits against the credit card. Some credit card issuers may increase your credit limit automatically or upon your request after a period of timely payments.

Secured credit cards aren’t as widely available as regular credit cards, so you might have to shop around for a good one – and you should.

Secured credit cards have fees that regular credit cards don’t have. An annual fee, application fee, and a processing fee aren’t uncommon.
As you shop around for a secured credit card make sure you understand the fees that will be charged. Watch out for credit cards with high fees that eat away your security deposit and reduce your available credit.

You’ll also find that secured credit cards have higher interest rates than regular credit cards. It’s just one of the costs of carrying the card. The point of having a secured credit card isn’t to carry a balance. The point is to build a solid credit history. If you pay your balance in full each month, the high interest rate won’t cost you. You should use your card to make small, affordable purchases every month and pay off the balance in full when your statement comes. Don’t forget the rule about credit card balances – your balance should never exceed 30% of your credit limit. That means a maximum $300 balance on a card with a $1,000 credit limit.

When you pick a secured card, make sure the credit card issuer reports to the three major credit bureaus – Equifax, Experian, and TransUnion. The point of the card is to establish or re-establish your credit history and that’s impossible if the credit card isn’t included on your credit report.
Also confirm that nothing about the way the account is reported will reveal that it’s a secured credit card.

Find out whether you can covert the card to an unsecured credit card after a period of timely payments. Make sure you understand what happens to your deposit if the card converts or if you decide to close your account.

Back to School in North Carolina

Back to School in North Carolina and payday loansThe school year is almost here again (North Carolina). Parents everywhere, rejoice! Soon, your home will be blissfully free of children for seven or eight hours Monday through Friday. Soon, believe it or not, you’ll even start to miss the little buggers. If you’re like most of us, you’ll also be spending a mint on school supplies. From clothes to pencils, paper, and lunchboxes, you’ll be spending a hefty amount for junior to go back to school. And, even after you’ve spent all that money, chances are he’ll come home with several notes from teachers explaining why they need some particular item that you wouldn’t have even thought about buying. Broke already, you might even need to take out payday loans in North Carolina to finish your school shopping.

While there’s no avoiding the expenses which a new school year brings, there are ways to avoid taking out payday loans to finance it. After all, you don’t want to still be paying off your kids’ school supply bill when the next summer vacation rolls around.

Start shopping early. Lots of stores run fantastic specials on school supplies, but they often start three to four weeks before the school year does. The old saying “The early bird catches the worm” was never more true than with school supply shopping. You can buy piles of spiral notebooks for ten to twenty cents while they are on sale, or wait and pay $1.50 or so each. The same kinds of bargains are out there for other school supplies as well.

Take this opportunity to make your kids finally clean out those nasty bedrooms. There are probably school supplies from three years ago lurking under the bed just waiting to be discovered. Additionally, if they keep their rooms clear (yeah, right), they’ll be less likely to lose the supplies you buy them now, costing you less money as the year wears on.

Don’t be afraid to buy some school clothes at rummage or garage sales. Designer clothes are expensive. Wearing used clothes won’t kill your kid, as long as you don’t make them wear used socks or underwear. One piece of advice, though: go into the next school district. While wearing garage sale clothes won’t kill anyone, an occasional teen has been known to die of embarrassment when another student at his or her school recognizes their shirt.

If you do need to take out a payday loan to cover some of the back to school expenses, take only what you need and get it paid off as soon as possible. Payday loans can be useful tools, but they can be a bitch to get off your back if you get into the cycle of re loaning.

Should Payday Loans Be Illegal?

Payday loans are typically small, unsecured loans that can be obtained by most people who have a job and a checkbook. You simply write out a check for the amount you want to borrow (plus interest, of course) and the loan agency gives you the cash, holding on to your check. If all goes according to plan, you return to pay off the loan, in cash, on your next pay day (or, in some instances, the pay day after next) and the loan company gives you your check back. If for some reason you don’t show up to pay the loan off on time, they cash the check.

How They Should Work

Done the right way, a payday loan can be an important stopgap for someone who hits an emergency with no way to pay for it between now and payday. A good example is when your car breaks down. If you’re like most people, you can’t get to work if your car won’t run. So, sucking it up and paying the high interest rates might be worth it to get your car back the same day so you don’t miss a lot of work. As long as you pay the loan off on pay day, it isn’t a big deal.

How They Usually Work in Reality


Too often, people borrow more than they’re going to be able to repay. Of course, not repaying it isn’t an option, so after you repay your loan, the company “re loans” you the money, less the interest, of course. With a typical $400 loan at 13% interest (a typical rate), you’re out $52. In some cases, clients keep re loaning the money over and over again. On the hypothetical $400 loan, re loaning will cost you almost $700 in a three month period, just in interest.

So, Should They Be Illegal?


The state or Arizona thinks so. Recently, legislation was passed in that state banning payday loans. And numerous other states have passed legislation heavily regulating the practice. In Michigan, payday loan agencies are required to give borrowers the option of paying their payday loans off in three monthly payments (though this may prevent future borrowing). But making them illegal takes away an important option for people who need the credit and don’t have other options.

So What Should Be Done?


We don’t claim to have all the answers on this. One thing the loan companies could do to police themselves is to stop promoting the loans as the answer for immediate gratification of things such as vacations and other desires that may be better put off if people can’t afford them. And whatever they do or don’t do, you can always manage your own affairs by refraining from using payday loans except when absolutely needed.

Legitimate reasons for payday loans

Let’s face it: if we’re looking at taking out payday loans, things are going very badly for us already. Assuming that we don’t have some crazy fetish for throwing money away, we would only consider a payday loan if we have already exhausted other means of obtaining credit. Before it gets to that point, our credit has likely been thoroughly trashed.

Payday loans are amongst the most expensive ways of obtaining money. If APR (annual percentage rates) were advertised as they are on bank loans, the signs in the widows of cash advance places would read something like this: GET CASH TODAY, LOW 200% APR. Of course, you’re never going to see that advertised in the payday loans store windows.

What you will see advertised are the benefits of a payday loan. Basically, here they are: You can get a loan now, and you can get a loan even if your credit is terrible. As a matter of fact, most places won’t even check your credit. The loans are for relatively small amounts, and the lenders are willing to take the risk that you will pay them back. In return, you get to pay the high interest rates.

That being said, there are some legitimate reasons to use payday loans. If you’ve exhausted other sources of credit, and have a legitimate need for cash in hand, right away, a payday loan may be your only option. Basically anyone with a job and a checking account can get a payday loan.

The main thing you want to remember when taking out your loan is that you are going to have to pay this back, on payday, at a high rate of interest. You will typically pay back $10 to $15 for every $100 you borrow, in addition to the money you borrowed itself. So, before you take out the loan, make sure that you really need it.

Needs that qualify as a relatively good reason for taking out a payday cash advance should meet two criteria:

  1. First, they should be genuinely important. With the interest you’ll be paying, that almost should go without saying.
  2. Secondly, the need should be urgent. Basically, if the need is truly important, ask yourself, “Is it really true that this can’t wait until I get paid?”

Shop around for your payday loan

If you find yourself in the unfortunate situation of having to take out payday loans to take care of needed expenses, you already know that you’re in a rough spot. When your credit is good enough to obtain money elsewhere, you don’t generally go to those kinds of places. Still, in a pinch, there are times when you may have no other viable options.

Shopping around a bit, however, will help you get the best deal you can on your loan.

Everyplace that offers payday loans charges high interest. There’s no getting around that fact. But just because all of the interest rates are high doesn’t mean they’re all the same. If you can save a percent or two, do it. Every dollar counts.

With the exception of those among us who are simply too young to have built up any credit at all, most of us have put ourselves in the situations that have limited our credit options. Still, we are human beings, and deserve to be treated with a certain amount of dignity, even if we have landed in difficult circumstances.

Don’t do business with people if they are rude to you. There are plenty of places offering cash advances. You don’t have to borrow money from the first place you go. Especially if you find yourself having to reloan, you don’t want to end up working with people who are difficult to work with.

The best thing to do with payday loans is to avoid them, if you can. But, if you find yourself in need of money right now, and you don’t have other viable options, a payday loan is sometimes better than the alternative. Just make sure that you don’t accept less than the best rates and service you can find. Just because you’re taking out a cash advance against payday doesn’t mean that you shouldn’t get the best deal that you can.

One more bit of advice here. Pay your payday loan off as soon as you can. If you do need to renew the loan, make sure that you do it for a little bit less every time. This might leave your wallet a few dollars lighter for the week, but at least you’ll be able to start digging your way out of the hole.