It's said that you may have a credit problem if you find yourself constantly applying for payday loans. That's because most people who take out payday loans are looking for a quick and dirty way to pay for something when they've gotten a little short between pay periods. And it's perfectly fine to apply for a payday loan if this happens. However, once you get into the habit of bouncing payday loan checks, you're most likely going to be digging deep when it comes to credit trouble. Here's why it's so costly to bounce a payday loan check and what you can do to protect yourself.
A payday loan check is a post-dated check you write to the payday loan lender before taking out the payday loan. Payday loan post dated checks are usually written for the amount borrowed plus interest and fees. Many people give a payday loan check to a lender and then walk away happy because they receive the money they need to make it to their next payday.
However, even though these people are happy by the time they walk away from the payday loan lender, they often aren't so happy when the lender is about to cash or deposit the check. And if the money is not in the account, the check will bounce.
Since a payday loan lender can make multiple attempts to collect his or her money, default borrowers may find themselves with not only fees from the lender for bouncing the check but also multiple insufficient funds fees from the bank. But here are some ways you can protect yourself from bouncing a check with payday loans.
Contact your bank before you think the check will be deposited.
If you think the money won't be in your account by the time the payday loan check is cashed, contact your bank and ask them to put a stop payment on the check. The bank will charge you a fee of about $30.00 for doing that, but that's just a one-time thirty dollar fee compared to the multiple fees you'd get if a payday loan lender tried to go into your bank multiple times to get the loan money back.
Give the lender cash.
Even though it's often required that you write a post dated check to the lender prior to being approved for a loan, it's advised that when the time to pay back the loan comes, you should pay the lender in cash rather than with a post dated check. That way you know the money is going straight from your hand to the bank lender. And you won't have to worry about how well you've kept your records for your bank account.
Don't write checks if you know you won't have money in the bank.
In other words, don't count on the "float." The float is the period of time that passes from the time the check is deposited to the time the check is fully processed and the funds are available in the payday loan borrowers account. Another way to think about it is from the time the check goes from being a pending transaction in your account to being a posted transaction. Don't count on that float time when writing a check to payday loan lenders. That could be a sign that you may not have the best handle on your money.
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