What Is Better - Cash Today or Late Fees Tomorrow

September 11, 2009 | Filed Under Money

No body likes to pay late fees on their bills. Late fees are the added charges on monthly bills that businesses like to apply not only to be sure people pay on time, but to fill their pockets for doing nothing. There are all many reasons that people get charged late fees for, but one of the most common is that the person just didn’t have the money to pay it. However, there are things that people can do to pay their bills on time and limit the late fees, but is it better to pay the late fees or get cash advance loan?

The following information looks at both cash advance pay day loans and late fees for monthly bills, to give people some information that could help them make the most out of their financial decision.

Cash Advance Loans: These are short term loans that are given to people without any credit check, and the money is deposited directly into their bank account within hours.

How do payday loans work? People can get payday loans, also referred to as cash advance loans, on the Internet or in person with nothing more than their bank account and ID. The cash advance is secured using a bank checking account number and borrower gives the details to the lender and grants access for them to the borrower’s bank account. Lenders guarantee that the loan will be paid back by having the bank information and ability to take the money when it is due. Lenders charge a fee for the service, and unlike long term loans, cash advance loans don’t have any interest, but rather a fee for the service the lender provides. The service fee varies from state to state so it’s good to check with the local laws before getting a cash advance. Most states have capped fees between $15 - $25 per $100 borrowed. This means that if a person takes out a $100 payday loan, they would need to pay back $115. A $15 dollar fee for the convenience of having $100 deposited directly in a bank. However, the full loan needs to be paid back by the next pay day, or within 2 weeks, and thus the reason its called a short-term loan. However, for a person that has to pay bills, and the bills charge late fees, paying a $15 fee instead of the late fees doesn’t sound so bad, or does it?

How do late fees work? Late fees are charged when a person doesn’t pay their bills on time. A lot of credit companies, like credit cards, will charge a late fee, and the fees can go from $10 to as much as $50 dollars. Most credit companies will charge between $25 - $40, and they don’t care what the balance of the account is or the amount due on the bill. Which means that even if the amount owed is only $15 and a person pays late, the credit card companies will still charge the same late fee. In addition, if a person has a couple of these types of accounts due and doesn’t have the money to pay them, they will be charge a couple of late fees that could total much more than the bill itself. Plus, if a person is near their credit limit, and they don’t pay on time, the credit card company charges the late fee on top of their existing balance, and if the fee puts the account over the limit then the person would be charged an over the limit fee as well. This means that not paying a $15 bill on a credit card could result in a $40 late fee, plus a $40 over the limit fee, for a total of $95. Now, the next bill comes due and they have to pay the $95 plus the next month’s bill of $15, for a grand total of $110.

Looking at these two financial situations, the person who pays the late fees haven’t gotten anything from the money they paid. Instead, they are paying $80 in fees, and $30 in balance payments, whereas with a payday loan they would get $100 upfront to do what they want. The person can pay their $15 bill, saving them $80, and still have $85 dollars in their pocket for some fun until the next pay day.

Another big difference between cash today and late fees tomorrow is the credit history. If a person doesn’t pay their bills on time it will effect their credit negatively, making it harder for them to get good credit in the future. Whereas, a cash advance loan doesn’t go on credit and the person is able to pay their bills on time keeping their credit history in tact. Even if a person doesn’t pay back their cash advance loan on time, they will be charged additional fees, but it won’t effect their credit or even show up on their credit, versus a credit card which impacts a person’s credit score monthly.

If people have to decide between getting a cash advance today or paying late fees tomorrow, the better choice would be to get the cash today and start paying bills. Credit history is not something to mess around with and not paying bills is the worst thing a person can do to their credit. In addition, the late fees charged are enough to put a person further into debt as they try to make their bills and keep up on the late fees.

Don’t wait till it’s too late, get cash today and pay the bills on time instead of paying late fees.

People that are looking for a payday loan can go to Cash Advance Reviews. They provide the best payday loans from the top rated loan sites.

Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.

Comments

Leave a Reply

About: Work At Home Resource Center

The Work At Home Resource Center was created to be a free online resource for people looking to start a home based business or just earn extra money by working at home.