People are now being alerted to the increasing rise in online payday loan schemes that are all set to make profit at the cost of people’s life. The Consumer Federation of America (CFA) has issued a warning for all people regarding the use of online payday loans services. The reason being the severe charge of fee of around $30 for every $100 that is borrowed if the user is not able to repay the loan back in due time. The annual interest rate climbs up to 650%. Surely a maddening effect.
What makes this process so commonly used by people despite knowing the risks is its easy access. Since every person now owns a credit or debit card along with an internet access it becomes extremely easy to just sit at home and apply for a loan.
The more delay the repayment time takes, the more the fee is increased. If you borrow $100, a fee of $15 will be charged, total amount you owe will be $115. And if you happen to borrow higher than this, then you can consider yourself robbed of any money that could be saved.
Online payday loan are becoming more and more popular because they are marketed almost all the time in front of user’s screen. Emails, search engines, ads, referrals, online communities etc, nearly everywhere there is an attraction for users to borrow. Not only that, the ads promise dream come true schemes which seems to be just perfect.
All users have to do is to log on to the site, fill up a form, give in particular details of bank account number, personal information, security number, employer information etc. With all this the loan is electronically transferred to the account. However all this may pose a great risk, as the online lenders are companies that most people never saw or know about and all private information is given to them. If it happens to be a scam artist, the customer might just have his account emptied.
Online payday loans provide around $200 to $2,500 loan right there and then. Most of the sites do not disclose the interest rate to users and it comes only later as a shock to most people. Who would have thought to pay $130 when they had taken a loan of only $100. Some sites also requires customers to keep their bank accounts open until the loan is repaid. This is high risk demand. CFA advises consumers to avoid having electronic access to a bank account and also to choose other alternatives rather than opt for payday loans.
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Posted by Batool Shamim in News · 1 Comment
Internet usage is increasing as Internet related crime is increasing, so it is very important that each network, the bank would be detrimental to the attention of online banking.