Pay day loans can be helpful when you are in immediate need of a few hundred dollars which you don’t have available to you. You’ve been to the typical banks and other lenders but they won’t help you. You don’t have anyone you can turn to. So, you turn to the payday loan stores you’ve heard so much about.

Pay day loan stores are designed for those emergencies when you are short on cash to make ends meet. It is easy to get a payday loan. All you have to do is prove that you have a bank account and a job. So, you take your bank statement, a pay-stub, and a copy of the front page of your phone bill with you to a payday loan store and you fill out the paperwork. (You can also apply online.)

Within a few minutes you will have your loan. That was easy. However, you had to post-date a check for a date two weeks later. No problem, you will have your next paycheck before then. What happens if you become ill and you don’t get paid for several days out of that pay period?

Payday loans are designed so that if you can’t make your payment to cover that post-dated check, you can do a “rollover” which means you simply apply for another payday loan. In fact, you could keep doing that every payday just trying to keep ahead of the payments. But, what does that do to your financial health?

Eventually, you will find yourself in a financial death spiral. Interest rates on payday loans are anywhere from 700 to 1800 percent. Some think that isn’t bad when compared to bank overdraft charges; but the difference is that the interest on these loans continues to add up over time making it more and more difficult to pay.

You might find yourself paying all your paychecks out in interest charges on the payday loans. This will cause you to not even touch the original loan amount and it may take years to pay off. Maybe you’ll never get the payday loans paid off.

Did you know that if you don’t cover the original post-dated check, the payday loan company might threaten to take you to court on criminal bad check charges? Your wages could be garnished. Besides the embarrassment, it could cost you your job! Obviously, if you lose your job, your financial health will only worsen.

Defaulting on payday loans will hurt your credit which will in turn give you a poor credit rating or score. A poor credit rating takes years to improve enough for home lenders and automobile lenders to approve a loan application. Poor credit history also will prevent you from being able to get major credit cards. Interest rates on the ones you already have will likely increase.

Since payday loans are designed to provide service for lower income people who generally have no assets, this sets up a trap. People who are irresponsible abuse the service by returning for more payday loans and they get stuck in the trap of the payday loan cycle. Breaking the cycle could take anywhere from a few weeks to several years.

Having your credit history tied up in poor ratings for a long period of time will devastate your financial health. You can improve it, but you have to work very hard at it. You have to stop abusing the payday loans by never getting a payday loan again. Work hard to pay off the payday loans.

Paying off your payday loan debts will not erase the bad credit reports; they will only show improvement. When your financial health improves, eventually you might be able to get a car loan from a local lender or higher interest lender. If you make all your car payments on time and pay the car loan off, then you will have actually begun to make your financial situation healthier.