Payday loans are intended to help low or middle income families when an emergency occurs and they need a short-term cash loan. If paid off immediately, a payday loan is not going to hurt anybody and may even be seen as a blessing. However, a payday loan over a long run of payments is not designed to improve a family’s financial situation.

Payday loans are actually designed for people who cannot manage their credit and continue to need payday loans and keep coming back to payday loan stores. Young people who don’t yet have a stable financial situation and probably rent and don’t yet own a home, or the working poor and low to middle income minorities are the type of customer for which payday loans are designed.

A family who is already struggling to make ends meet and has no savings can be hurt further by getting on the dangerous debt cycle of payday loans. They can find themselves going from paycheck to paycheck just trying to make the payday loan payments. They have little left over for house payments or car payments. Their home could be lost in foreclosure and their car repossessed. The stress and embarrassment from these events can be devastating to marriages and families.

Payday loan stores don’t offer any kind of savings plans or other incentives to entice families to save. The payday loan stores make their money from those people who have no savings or nest eggs to help them through rough times.

Families are also hurt by payday loans if the post-dated check for the loan is not paid off because the payday loan company will report you if you don’t pay on time. Your credit will be ruined if it hasn’t been already, and you might not be able to write checks in other places or even at your favorite grocery store.

If payday loan stores report you as a bad credit risk, your interest rates and your minimum payments will increase on your credit cards, making them difficult to pay off. Your house insurance premiums can also go up because the underwriters consider people who are bad financial risks to be higher risk for claims against their homeowner’s policy. If your house insurance premiums go up, you may not be able to keep the payments current and your policy will be cancelled due to non-payment. If that happens, your mortgage can become invalid and you will lose your home. The payday loan companies or other lenders could have your wages garnished by the courts. With your wages tied up in garnishment, you have no means to pay anything or to make decisions on what bills will be paid with your paychecks.

If you find that you have no other option than to use a payday loan, be sure to understand the long-term effects on your family and your finances. Know exactly the percentage rates and how high your payments will be. Pay off the loan immediately. Avoid a “rollover” loan. Never get a second payday loan without getting the previous loan paid off first.

Being always broke puts a strain on any family and makes you feel embarrassed and that your situation is hopeless. People have even been known to be so desperate that they commit suicide because they felt their payday loan debts and overall financial situation was hopeless.

When it comes to payday loans, common sense and good personal financial strategies and decisions can make the difference in whether or not a payday loan will be a blessing or if it will hurt your family. The best thing for your family’s sake would be to avoid applying for a payday loan in the first place.