CHICAGO, IL – February 2, 2012 – Distressed consumers, worried about paying bills or buying food for their families, are turning to payday loans for fast cash. While many borrowers believe they can pay off the loans quickly, the Better Business Bureau serving Chicago and northern Illinois (BBB) warns payday loans may have long-lasting and devastating effects.
“Consumers should be extremely cautious when considering loans either from an online business or a neighborhood loan office,” said Steve J. Bernas, President & CEO of the Better Business Bureau serving Chicago and northern Illinois. “Payday loans can trap borrowers in a revolving door of debt that can be difficult to escape. When borrowers discover their loan repayments leave them unable to meet their bills, they are forced to take out additional payday loans.”
The BBB offers these tips for consumers considering taking out a payday loan:
- See if your bank or credit union offers short term loans.
- Contact your creditors or loan Service Company as quickly as possible if you are having trouble with payments. Ask if you can have more time.
- Use a credit card for emergencies. Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. Find out if you can delay paying a bill which has no interest charges, and make payment arrangements with the company.
- If you do take out a payday loan, read the agreement thoroughly and make sure you understand it. Know exactly when the loan payment is due, how the money will be collected and how much your payments will total.
For more consumer tips you can trust from your BBB, visit www.bbb.org
As a private, non-profit organization, the purpose of the Better Business Bureau is to promote an ethical marketplace. BBBs help resolve buyer/seller complaints by means of conciliation, mediation and arbitration. BBBs also review advertising claims, online business practices and charitable organizations. BBBs develop and issue reports on businesses and nonprofit organizations and encourage people to check out a company or charity before making a purchase or donation.