Short on cash for the holidays? The last thing you should do is get a payday advance loan. You might get your kid the XBox he thinks he deserves, but it will not be worth it — not even close. There are better ways to deal with the pressures of the holiday season.

Let’s take a look at the numbers together.

The tricky thing about payday advance loan providers is they don’t announce their interest rates outright, because to do so would be insane — both for you and them. Not only that, but the loans are meant to be paid back within 7-14 days, basically when you get your next paycheck, so annualizing the rate wouldn’t make all that much sense. Instead they’ll mention their “fees.”

eHolidayCash, which we used for reference, admits that their fees “vary by the loan amount and the length of the borrowing terms.” This is moderately tricky use of language here. We typically use the term “fee” to denote something flat — something that doesn’t vary with time. When talking about loans, rates change with time and amount, because rates are a relative number, not a static amount (that’s a fee, usually).

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Semantics aside, these fees are terrible! “You can typically expect,” eHolidayCash writes, “fees between $15 – $30 per $100 cash loan.” Oof.

Let’s pretend you have ‘good’ credit and get ‘good’ terms on a $500 holiday loan. You’ll owe your lender $560 in 14 days. Annualized, that’s 390%, and we’re not even compounding the interest. Would you take out a 390% APR loan, knowingly?

We know the allure of instant, and seemingly cheap, cash can distract from actual number crunching. But we really hope you’d never need to go this route.

You have other options, and don’t forget it. If you’re a member of a credit union, many of them offer Christmas loans at excellent rates. Many of these products boast sub-10% APR, making them an even wiser product to rely on than your credit card. Then, there’s your credit card, which will be a more affordable line of cash than a payday advance loan even if you’re paying your penalty APR the whole time.

If you’ve already exhausted these options, then you have family members, whom you can either a) borrow from, which involves a lot of pride-swallowing but no APR, or b) not buy XBoxes for. The choice here is yours, and depends entirely on whether you want America to be the great nation she once was, once more. Which will it be?

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  • Sun W. Kim

    Payday loans are for suckas.

    > then you have family members, whom you can either a) borrow from, 
    Don’t borrow. Suck it up and forego the gift. I know people that buy in December and six months later still paying off their credit card. Stupid.