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They seem to be everywhere. You’ve seen the payday loan stores all over town. You may have even thought that you should try one to get you through a hard week.

Ever hear of the phrase, “If something is too good to be true, it probably is?” Payday loan stores are exactly that. They offer quick, temporary solutions to a person’s financial stress. But in the long run they can do real damage.

Getting a loan with a payday lender could send you down a deep hole that may take years to get out of. Payday loans leave an aftermath of a much more debilitating situation in their wake for people having trouble financially.

Here’s how payday lenders catch and hold consumers:

To receive cash, you write a check to the store for the amount plus the finance charge, which the lender will cash the next time you get a paycheck. They’ll tell you finance charges range from $15 to $50 per $100, but won’t tell you exactly what the interest rate (or APR) will be. Interest rates can run from 390% to 780%! If your state does not cap the maximum cost, the rates can be even higher!

Here’s the math to figure out your interest rate from a payday lending store. This example is based on paying a finance charge of $50 with a 14-day loan term:

• Divide the finance charge by the amount you’re borrowing: $50/$400 = 0.125
• Multiply the answer by the number of days in a year: 0.125 x 365 = 45.625
• Divide the answer by the number of days in the term: 45.625/ 14 = 3.2589
• Multiply the answer by 100. This is your APR: 3.2589 x 100 = 325.89%

But here’s the worst part. At the end of your 14-day term, you have to pay the lender $450. But if you can’t pay it off entirely, you’ll have to roll the balance over, pay another $50 fee, as well as interest charges. At the end of your second term, your balance is almost $600, and if you can’t pay that off entirely, you roll it over again. See how quickly your $400 loan can cost you thousands of dollars?

So what are some alternatives?

• Ask your employer for an advance on your next paycheck.
• Consider asking family members or friends for a short-term loan.
• If you are or were a military service member, you may be eligible for short-term lending or emergency relief assistance. Contact Military OneSource at 800-342-9647, or visit http://www.militaryonesource.mil for information.
• Get a personal loan through Consumers Credit Union. We offer loans with low, fixed interest rates – MUCH LOWER than the payday loan stores.
• Open a low-cost, low-interest credit card through Consumers Credit Union and use it only for emergencies.

No one wants to find themselves in a financial emergency, but there are much better options than turning to a payday lender. To find out more about payday lending and learn about safer ways to get quick cash, visit the Consumer Federation of America at http://www.paydayloaninfo.org/consumer-help

Consumers Credit Union members also have access to GreenPath Financial Wellness services. They offer free debt counseling and financial coaching. If needed, they can help with full service debt management plans as well.

If you have any questions, see us at Consumers Credit Union. We’re committed to helping our members gain financial well-being and can point you to the appropriate resources to help you get control of your finances.