Studies Show Cost of Payday Loans Not Excessive

Studies have shown that payday loan clients are mostly low to middle income families (LMI) that do not have access to normal banking and are in need of short term quick cash. Critics of the payday loan industry keep arguing that these lenders have excessive fees that swallow up the customers’ income.

A study called “And Banking for All ?” by Michael Barr and Benjamin Keys of the University of Michigan and Jane Dokko of the Federal Reserve Board says that “for the vast majority of households, annual outlays on financial services for transactional and credit products are relatively small, around one percent of annual income.”

The study was done on an average of 1000 Detroit LMI families and shows detailed statistics which prove that most of the mainstream financial fees such as bank account fees, check fees , overdraft charges or credit card fees are way more significant than alternative financial service expenses such as payday loans. The study also says that “The alternative financial services sector plays a significant role in the provision of financial services to LMI households”. Federal Reserve studies also show that 25 percent of the LMI households are unbanked, which makes the need for payday loans and check cashing services.

The payday loans have a negative impact on just a few LMI families but, at a national level, customers of payday lenders pay from 400 to 600 dollars yearly, which are just 2 or 3 percent of their annual income. Just in Detroit, the sums were a lot smaller, between 41 and 98 dollars.

In Detroit, LMI households mainly used payday loans to avoid food shortages and evictions rather than luxurious expenses, as the media would have the people believe. Also, payday loans are their only option since most of the LMI families are not qualified for most of the traditional banking offers because of their low income.

There are financial institutions that are trying to compete with payday lenders by offering similar products, yet there is little motivation to use these services because these institutions draw their operating money from expensive services such as overdraft protection which makes the risk of potential loss even greater.

When it comes to savings, it seems that people know very little about it. That’s why most of the payday loan lenders and banks are trying to give information as detailed as possible.

Many LMI households prefer to use payday loan services and remain unbanked because of the high fees and conditions imposed by traditional banks, which are almost impossible for them. Payday loans are very popular because they work with a segment of the population that traditional banks can barely help or cannot help at all. And as the studies show, compared to the annual income, it is clear that the payday loan fees are not even remotely excessive.

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Know The Federal Minimum Wage Act 2009 and U.S. Labor Laws

Federal Minimum Wage 2009

The federal minimum wage has been allocated at $7.25 per hour from July 24, 2009 onwards. As decided, in all the states of the United States, the workers should be paid minimum $7.25 per hour. In Washington, D.C., the workers must be paid $8.25 per hour.

The federal minimum wage of $7.25 works out to be approximately $1,200 per month before tax. If the worker works 40 hours per week and deduction of tax is considered to be about 24 percent as per the area, the worker is left with less than $1,000 per month for taking home. As a result, the minimum wage earner becomes dependent on tax free payday loans to support his family.

What is the Lower Limit?

The problem of minimum wage becomes even more critical for workers who are paying rent. States like Colorado allocates their minimum wage based on inflation. As such, their minimum wage works out to $7.24 an hour which is lower than the federal minimum wage. It is not only illegal, but it also reflects the state of the economy.

The principle of minimum wage based on inflation is fine if the economy is healthy. In reality the economic status of most of the states is alarming implying that if the minimum age in the state is lowered, the workers would be compelled to take pay cuts. The concept of the federal state to lower the minimum age is a disaster; because of the unemployment crisis and workers are unable find any alternative but take up jobs of lower pay.

Result of Evading Federal Minimum Wage

It is a great relief that states like Colorado are bound by law to pay Federal minimum wage, even if they intend to pay lower wage. It has also been identified that some business houses try to evade paying the federal minimum wage to the workers. They are severely penalized.

As per judgment given by the court, Southern California Maid Service and Carpet Cleaning Inc. must pay $3.5 million to their employees by Nov. 12^th. There are reports that Southern California Maid Service and Carpet Cleaning Inc. owners had to spend five days in jail when they failed to pay the minimum wage to the workers.

Southland residential cleaning service owners who refused to obey the order of the court were arrested and later on release. In turn, they had to pay $3.5 million in back wages, in addition to fines, interest and liquidated damages to not less than 385 workers.

Malady of Misinterpretation

In Memphis the Tasty Buffet owners were forced to pay fine due to their incapability to pay the minimum wage to the workers. When the owners could not pay the original fixed fine, the penalty was doubled to $459,658. The employers pleaded that they did not interpret the labor law properly and that they did provide food and lodging to the workers over their wages.

Exceptions to Federal Minimum Wage

There are few exceptions where the employers can pay lower than federal minimum wage. The few examples are employers of the disabled workers, companions for the old and elderly, commissioned sales employees, deliverers of newspaper, fishermen, farm workers and few others.

The food service workers in some states who have additional earning from tips are also paid less than minimum wage. Thus, Federal Minimum Wage Law is a great boon for grass root workers of the country.

If you are living on minimum wage and find yourself short of money from your next paycheck we can help match you with a payday loan lender online. Just fill out the form to the left to be matched with a lender that suits your needs. Our form is SSL Secure for your protection.

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Against the gloomy background of recession, many Americans find themselves in the awkward position of not being able to make ends meet between two consecutive paydays. Consequently, they need to start looking for alternative sources of cash. If that’s you, the fastest solution would probably be applying for an unsecured short-term loan that should go as high as $1500.

Filling out an online cash advance application can let you off the financial hook within 24 hours. It’s not only more cost-effective but also faster than traditional loans since applicants who meet the necessary qualifications can be approved instantly and have the money electronically transferred to their accounts.

There are a few prerequisites to meet prior to applying for such a loan: the applicant must be 18, have a bank account with direct deposit and show proof of a minimum steady income of $1000 per month as well as a current bank statement.

Unlike consumers resorting to conventional lenders who generally cater to their long-term cash needs, payday loan applicants would normally need these funds to take care of daily expenses: groceries, auto repairs, home improvement, vacations, transportation, medical bills, mortgage/rent payments, etc.

Payday loans are also known as loans for bad credit as the applicant’s creditworthiness is not inquired upon. They can also prove extremely useful following bankruptcy filings. Consumers can apply for a fast cash advance instead of failing to pay up a bill. It’s simple, cost-effective and not detrimental to their credit history. The conventional lender’s penalty fees for overdue bills run much higher than the $15 financing fee typically charged by a payday lender for a two-week cash advance.  You can find a payday lender online by filling out our secure form on the left of our homepage. 

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Parents often want to make a financial plan before their child arrives on the scene and the best time to start planning financially for a child is during pregnancy.  Luckily, expecting parents have nine months to prepare their home and finances for a child and this is plenty of time to start making great plans that will help them fiscally.  Below are a few tips for parents that are expecting:

1.Talk with your Partner – One of the most important decisions that must be made is how long the parent will stay home with the baby.  In many cases, this does effect the income of the household and adjustments need to be made so that the family can live comfortably off of one income

2.Don’t Live Beyond your Means – Living within a budget means that a person must resist the temptation to purchase things that they can’t afford.  It may also be a good move to delay major purchases as long as possible to save more money for the baby.

3. Have Emergency Cash – At least three to six months of emergency cash is smart to have.  Individuals can eliminate small things that may eat away at their pocket books to start establishing an emergency cash fund.  Having an emergency fund can prove to be a financial lifesaver in the future.

4. Have life insurance – Life insurance provides financial security for a family and it’s smart to have in the case of an unfortunate accident.

5. Sign up for a Flexible Spending Account – Having an account that will save on medical expenses is a great help for a couple that is expecting.  Prenatal care and delivery can create big medical bills but having great health insurance will cover this financial aspect of birth.

These are just a few tips to keep in mind when that new addition is on the way. Having a baby is an exciting experience. Unfortunately, for some families, a new baby can become a financial burden. With a little forward planning and money smarts, you and your bundle of joy can live happily, without breaking the bank or feeling financially pressured.

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Most of us never give much thought to payday loans until we find themselves in a financial soup for whatever reasons. It may be overspending, it maybe poor budgeting or it may be a simple oversight regarding the balance left in the account; no matter what reason, payday loans come to the rescue and are more than welcome in cases of emergency.

Payday loans are a good idea to keep afloat for the time being if overspending has happened or the balance becomes low. Although the fees for payday loans vary from lender to lender, it is usually a reasonable amount and generally costs a lot less money than what a bank would charge in terms of overdrafts.

You need to fill out an application at the Green Payday Loans.com and we’ll get in touch with several lenders for the loan. So, basically Green Payday Loans.com does all the legwork searching for the lowest rates possible and the whole process takes only a couple of minutes online. You can assess cash within a couple of hours as the lender deposits the required amount electronically into your account.

At times when the automatic payment gets depleted and if your account is overdrawn, and you have already taken a payday loan then it can save a lot of money. It becomes easier to repay the loan until the next payday and it turns out to be less expensive than having the overdraft fees automatically cut from the balance after the payday.

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New Payday Regulations

If you are in the market for a payday loan, you should be aware of new and upcoming regulations. On 1st January, 2010 new payday regulations and laws are coming. These regulations have been put into place by the DFI. According to the new laws:

• You may borrow only 30% of your monthly income (gross) or $700, whichever is lower
• All your loan information will be put up in a registered state level database. Thus all the lenders will have complete information of your loans
• In a 12 month period you are allowed to take only 8 payday loans
• In case you can’t pay your loan before the due date, you must inform the lender. He can allow you to pay it within 90 or 180 days without any additional fees, depending on the loan size
• No lender can harass you or intimidate you when he comes for collecting his payment. In case he does, you may contact and file a complaint the Washington State Department of Financial Institutions.

Remember to regulate your expenses, make sure you can afford to pay back what you have been lended. Verify and understand your options before making an agreement with a lender. Be sure to check their license status and their adherence to current payday lender laws.

Verify a lender’s license and learn more at http://www.dfi.wa.gov/consumers/education/payday_loans.htm

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Be Careful of Unlicensed Payday Lenders

If you are planning to borrow money from any payday lender then you need to be careful.  A warning has been issued by the Department of Financial Institutions regarding unlicensed lenders. It aims to inform consumers about a growing threat: many unlicensed lenders offer you services which are considered illegal.

The department has also offers consumers an easy solution to this problem. It asks you to verify the licenses of the lender. Payday lenders are required to have a license under DFI before they can begin business. If they fail to do so, their business is not legal.

It is very easy to check if the lender is licensed or not. You just need to visit the website “http://www.dfi.wa.gov” www.dfi.wa.gov and check the lender’s license there.

Remember to check your lender’s license before committing to a payday loan, and make sure they are within regulations at the time of your loan.

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