Surprising results of a new study reveal that former Payday Cash Advance customers who were denied access to the loans ended up using much less desirable alternatives, which cost more money and did more damage to their financial health.
Online PR News – 17-November-2009 – – These second-choice options included utility shutdowns and overdrafts, according to a study performed by a Dartmouth Economist.
This surprising new study performed by an Ivy League university economist has revolutionized the way the public is viewing the payday cash advance. People are now learning that this type of short term loan serves a portion of the population who really have nowhere else to turn and, taking this option away from them results in less than desirable situations.
"It's all about options and perspective, comparing the value of a payday cash advance in these people's lives" says Marie Hoffmeyer, a grad student at University of Arizona who's been studying the economic factors surrounding the impact of the payday cash advance. "It may sound like a bad idea to pay $20 for a $100 loan to you" says Ms. Hoffmeyer, "...but when you consider what it costs to have your utilities shut down and how much it costs to have them turned back on, it's a very good deal!".
She's right, according to the study out this month. A person who makes use of a payday cash advance does so not because they don't know any better about interest rates, they do so becaues they've weighed the alternatives and found that payday cash advances do actually make sense in some situations. When you can't pay your utility bill, the utility company will eventually shut off your power, water, gas or whatever. They'll charge you a fee for that nice service. Then when you get the money together to pay your bill, they'll charge you again to have it turned back on. If ti takes too long for you to gather the money to pay your bill, they may also report this to a credit reporting bureau, negatively affecting the credit history. It becomes a compounding disaster for the person's finanical health.
With a payday cash advance, you can get the money withing 24 hours and pay off your utility bill. Your power stays on, your life continutes uninterupted, and there are no shutoff and hook up fees to pay. Your credit history is not affected. And you pay only average of $15 per $100 borrowed. For so many households, getting a payday cash advance is the beter choice, when their options are limited.
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