By Stewart Pelto on May 20, 2010
.jpg.aspx?width=75&height=75) You need a tank of gas to get to work to earn money to buy a tank of gas. You’re broke but need money right NOW. What can you do to get some quick cash?
CASH ADVANCE: Use your credit card to withdraw money from an ATM. Pay the ATM fee. Then forfeit the normal interest-free grace period you enjoy when you pay your bill on time each month. Then forfeit your normal APR. You just gave your creditor permission to collect higher interest on your “cash advance” instantly.
PAYDAY LOAN, STORE: Find a convenience store that advertises “payday loans” in bright neon script. Take out a two-week loan at 15 to 30% interest to be paid in full by your next paycheck. Want $400 now? Write a check for $460 to be cashed on your next payday and walk out of the store with what appears to be a fatter wallet.
PAYDAY LOAN, ONLINE: Seemingly even more instantaneous than a convenience store. One website’s slogan: “Fill your empty wallet! Wired in 1 hour! Instant Approval! Bad Credit OK!” The same 15 to 30% loan interest applies online but you have the chance to make instant FREE money by referring their online service to your buddies! $100 per referral up to $1500!
REALITY CHECK: To nab that free $1500 you need 15 friends in an unlikely situation: desperate for cash but rich enough to pay for internet (to check their e-mails for your referral). It gets worse: turn that 15 to 30% two-week interest rate into a yearly figure and you get 400 to 800%. Want $400 now? Be prepared to pay two weeks’ worth of interest that would gut you for $3200 over the course of a year.
BOTTOM LINE: Fast cash is NOT the way to stabilize your finances. You will NEVER develop long-term wealth by paying $3600 later for $400 now. That is unsustainable. Be patient, budget your income, and get your money slowly like everyone else. Soon enough you won’t have to pay outrageous interest rates just to have cash. It’ll be sitting pretty in your bank instead.
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