Payday advances might seem like a good idea, but they usually do not pay off in the long run.[/caption] Every day there are millions of consumers looking to borrow money; from banks or relatives, from thousands of dollars to a couple of quarters. While many people try to fund their needs — whether it’s something as simple as a bottle of water or something much greater, like a start-up business — finding the right people to borrow from is important. After all, you don’t want to be hounded by your co-worker for those 50 cents you borrowed last week do you?
How much you need to borrow, and for what purpose, will be taken into account when finding your lender. There are some people you should not be borrowing from, however. Here is who you shouldn’t borrow money from.
- Family & Friends – Your family might be the first ones you turn to in a time of need, but borrowing money from them does not always work out in your favor. You shouldn’t borrow money from family because you are risking that close relationship if you’re not able to pay back what you’ve borrow in the agreed on time frame, or, even worse, ever.
- Credit Cards – Many credit cards offer cash advances for customers. If you’re not careful and closely read through the fine print, you might end up paying a higher interest on that cash than you would on a normal purchase along with an additional fee. You end up borrowing more than you even realize.
- Payday Loans – If you have never used a payday loan, now is not the time to start. Payday loans are basically cash advances which you pay back upon receiving your paycheck. You pay back the money you owe along with the interest and a fee. Interest rates on average can between 15 and 20 percent. Payday loans are not a good borrowing strategy because using them can turn into a vicious cycle as interest rates begin to pile up.
- Pawn Shops – As much as we want to believe reality TV, not all pawn shops are throwing money at their customers for their goods. Some people use pawn shops as a way to get quick money as the shop will hold your stuff for an allotted amount of time. If you do not pay back your ‘loan’ they can sell your collateral, usually for more than you borrowed.