February 26, 2010 Los Angeles, CA.  Pay1Day.com. As new consumer protection acts decrease traditional lending opportunities, alternative loans, namely payday loans, have been on the rise, along with debate from both the consumer and lender standpoint regarding policy and practice.

Comparing to traditional loans,  payday advance loans costs can be attributed to the ease and speed of acquisition with minimal requirements of income, credit history, and housing, along with the resources needed to dispatch loans more easily and faster, usually under one business day.  Because of these inherent risks, payday loans are offered at a higher cost. Nonetheless, growing controversy continues as the rate of borrowers taking out payday loans increases, questioning the loan’s interest rate, fees, and policy as well as their necessity.

The usual payday loan fees are $15 – $35 per $100 borrowed within a 2 week period (the period in between pay dates) and are meant to be taken out only in real need when other alternatives are unavailable, such as borrowing from friends or using credit cards.  In addition, payday cash advances are intended to be held just in between pay periods and not throughout the year, hence its name, “payday” loans.

Payday loans are not new inventions. Big banks have increasingly extended similar types of products under names like checking advance services, with Wells Fargo offering such a product since 1994. The major difference is that payday loans, offered by independent financial institutions, are not backed by the federal reserve, offering a greater risk to the payday lender, seeking counterbalance by passing costs to the borrower.  In addition, with the above-average payment default rate in the payday industry, it becomes more clear why higher risk loans, such as payday loans, come at a raised price.

If a loan is paid in full upon the first due date, then the interest rate of this loan falls approximately between 15% – 35%. The problem occurs when the borrower is late on payments or makes a minimum payment that results in rolling over a balance to a next term because additional fees will be applied to the account which can become very costly, especially if this is made into a regular habit.

The choice to apply for and obtain a payday loan is up to the customer.  However, the duty to notify the customer of the loan’s terms and fees befalls on the lender. If the customer agrees to the lender’s upfront notice regarding rates, terms, and fees, then that results in a contract with no foul play, not different from the decision of paying the premium price tag for designer clothes or luxury automobile.   In that case, it would not be similar to a hidden overdraft protection fee or arbitrary credit card interest rate hikes.

The problem occurs when there are concealed terms and fees such as the ones resulting in the Overdraft Fee Legislation and Credit Act of 2009 that protected consumers from too-small-of-a-fine-print terms and unfair interest rate hikes. If a customer is made fully aware of their terms and fees obligations, a providing lender, whether it be a bank or a payday lender, should not be held liable for the customer’s inability to fulfill them.

February 25, 2010. The implementation of the Card Act of 2009 and the Overdraft Fee Legislation marks an increasingly shifted focus from traditional loan products to payday loan type services by big banks , observes a Bloomberg article and Solomon Finance.  Although the new reforms have made it difficult to sustain profitability from credit card and overdraft fees, two of banks’ most profitable products, questions arise whether the recent push for short term small cash loans, more commonly called checking advance products, will be successful for national banks while competing with direct payday loan lenders.

Recession Piggy Bank

Checking advance products are cash loans usually ranging from $100 – $500 with annual interest rates at about 120% if paid within 30 days.  These products are not new to big banks: Wells Fargo have had these loans as part of their offerings since 1994 and in 2008 by Fifth Third Bank.  These offerings are similar to payday loans with comparable interest rates and repayment time frames, usually occurring on the borrower’s next pay period with the added convenience of automatic payment withdrawals due to the issuance of the borrower’s account by the corresponding bank.

By getting into the payday loan business, big banks face two major issues: competition from established payday lenders with years and even decades of experience, and the real-life ability to profit from $500 loans with existing big-bank overhead.

Established payday lenders, whether it be online payday lenders or brick-and-mortar paycheck cashing stores, have gotten quick cash loans down to a customer service-oriented science where loans can be approved within seconds and cash can be delivered to the customer within hours; with an online payday loan lender, the entire process  can be done from the customer’s computer at practically any place in the world with an internet connection; in addition, the flexibility and added convenience such as faster customer support via multiple methods such as email, phone, fax, and the ability to customize loan features that stem from the smaller scale nature of payday loan lenders, presents a niche-barrier that may be difficult for national banks to overcome.

Replicating the payday loans business model while searching to fulfill the gap caused by the Overdraft Fee Legislation and Card Act of 2009, will prove to be an obstacle for traditional banks, interesting to follow throughout the rest of 2010.

According to Solomon Finance, payday loans lending may increase from the result of the new Credit Card Reforms, known as the CARD act, implemented on February 22, 2010. The new act enforces some stringent rules on credit card companies to protect consumers from ambiguous credit terms, fluctuating interest rates, and uninformed decision making. With these changes in effect, banks will focus on lending to those with near-perfect credit, possibly causing consumers with not-so-perfect credit to seek alternative types of loans such as payday loans…… for more on this story, Click here.

The new Credit Card Reforms, known as the CARD act, implemented on February 22, 2010, enforces some stringent rules on credit card companies to protect consumers from ambiguous credit terms, fluctuating interest rates, and uninformed decision making. With these changes in effect, banks will focus on lending to those with near-perfect credit, possibly causing consumers with not-so-perfect credit to seek alternative types of loans such as payday loans.

If regular consumers are finding it difficult to make ends meet in between paychecks without the ability to apply for traditional loans, they may have to turn to payday lenders who offer an easier and faster way to obtain quick cash.   This is evident in the increase in earnings by Texas-based cash loan company which had doubled their fourth quarter earnings to $33 million and another advance company who had tripled their earnings to almost $20 million.

The new credit card reforms, effective in early 2010, prohibits credit card companies from sporadically increasing high interest rates to consumers, however, it does not fully prevent other types of fees such as zero balance and inactive card fees.  Because of this, credit card companies will increasingly tighten up lending to customers, especially those with poor credit history,  to reduce lending risks, especially when charging higher interest rates to paying consumers are not an option for recouping losses.    This is why payday loans seem like an attractive alternative.

Payday loans are short term, small cash loans, usually between $100 – $1000, granted to consumers with the loan due date being the next pay date, although some payday lenders allow for due date extension.   The advantage of payday loans, relative to traditional loans, are that they are much easier to qualify for and faster to obtain with some payday lenders offering an online service where one can apply for and be approved for a payday loan online.

Traditional bank loans and credit card criteria usually require a higher credit score and clean credit history in addition to a longer employment history (usually a minimum of two years), and housing history (also a minimum of two years).  With payday cash loans, the usual requirement is employment with income enough to substantiate repayment.

Because of the ease of obtaining payday loans, they are considered high-risk loans which are reflected in larger interest rates ranging from 15% – 30% with APR ranging from 300% – 800%.  Hence, those who get payday loans are advised to pay them off during the first due date as to not incur late payment penalties or loan extension fees.

With payday loans, just as with credit card debt and other types of loans, if consumers are well-informed of the pros and cons of terms, they will be better able to make the right decisions.

With the new implementation of the credit card regulations, known as the CARD act, consumers may have to seek alternative lending such as payday loans.  When we put restrictions on banks, they can’t charge as much, the inability to profit off of high interest rates makes them take less riskier loans which means that customers who don’t have perfect credit may have to turn to alternative types of loans such as payday loans… read more about it here.

New credit card regulations, effective Monday February 22, 2010, may be able to give customers more rights to reasonable fees, stable, but not necessarily low, interest rates, and contracts in addition to providing billing statements, and terms that are easier to understand.   These credit card reforms were implemented to prevent abusive and exploitative practices by credit card companies that could result in excessive fees and debt.

Let you know ahead of time Some of these new regulations include requiring credit card companies to give 45 days of notice before increasing interest rates or fees.  As a result, consumers can apply payments to balances with higher interest rates, and to send bills 21 days before their due date in the mail.   In addition, the new regulations disallow the increase of interest rates to customers just because they make late payments on related bills.

Even with these new laws in place, there are still loopholes that allow finance companies to come up with other ways to extract income from consumers through other types of costs and fees.  Because of this cat and mouse game, lawmakers are encouraging the creation of a Consumer Financial Protection Agency ( CFPA ) as a legal entity to protect the rights of consumers.

This financial news posting was brought to you by Pay1Day.com, a direct payday lender offering fast, easy, and convenient payday loans.

US economy is improving yet many Americans are still struggling with their personal finances so if you are among millions of these fellow Americans, you are not alone.  There are many things you can do to make sure you can stretch your dollar and save money  some of them are as following:

1. Don’t eat out as often: Cooking at home will help you save some serious cash. When you eat out, you are not only paying for the cost of the food, but also the restaurants overhead (employees, operating costs, etc) as well as the restaurant profit. Also cooking at home is beneficial for your health as you have better control of what goes in your food.

2. Make your own tea or coffee: Average cost of espressos drinks are about $4 a cup and average cup of regular team coffee are $1.50 a cup. Just calculate how many cup of coffee or tea you drink a week, and calculate how much money you could be saving if you were to brew your own coffee or tea.  The point here is to do things by yourself using your own two hands. If you need to do some welding or polishing, get a work positioner to help you hold your work piece down instead of hiring help.

3. Avoid Impulsive shopping:  Whether you are going to grocery store or shopping for other items, make sure you make a list of the items you need and less of the items you want then stick to that list religiously.

4. Pay Your Bills On time:  Paying bills on time will save you some good cash end of the year because you will be avoiding late fees and possible interest rates. It will also help you maintain good credit.

5. Avoid ATM Fees: Traditional banks make great deal of their profit from ATM fees. When you are going to work or going out, make sure you have enough cash with you so you don’t have to use other banks ATM. If you need more cash that you have on you, try to look for your own bank’s local branch so you avoid ATM fees

6. Drive Less and Use Public Transportation More Often: Try to use public transportation where possible. If you must drive, take the shortest distance, and focus on getting to and from your destination. Gas is expensive. Average gas price is above $3 a gallon and you could be saving good amount of money if you reduce driving .

7. Plan Holidays and Vacation Ahead of Time: Hotels, airplane tickets, and car rentals will be much cheaper if you book them weeks possibly months in advance.

8.  Reduce Your Entertainment Spending:  We all need to be entertained in one way or another. Some like to go movies, some like to go to bars, clubs, golfing, or various activities.  By reducing how often you go out, and finding alternatives to entertain yourself (for example renting DVDs instead of going to the movies), you can save great deal of money.

9. Regulate Your Utility Usage: Turn of the unnecessarily lights, unplug your phone and laptop charger when not being used, turn off AC or heater while you are not at home, and don’t keep the water running if not using it. This will help you save both your money and the environment.

10. Recognize Where You Stand Financially:  You may have friends who like to buy new cars, eat out often, and buy new gadgets and furniture often. It is OK to have friends like them but before you get influenced by their lavish life style, make sure you know where you stand financially and don’t spend beyond your means.

These friendly suggestions brought to you by your direct payday lender, Pay1Day.com

Pay1Day.com is a direct payday lender that can offer you the quickest most convenient way to get a payday loan. We offer instant payday loan approvals, no faxing payday loans, and cash up to $800 deposited directly into your bank account within one business day. Just fill out a short and easy payday application, receive an instant online approval, and then receive the funds fast.

As a direct payday loan lender, we know how to simplify and streamline the process so that you get fast cash with no hassles. We offer a secure online application which you can fill out from the comfort and privacy of your own home. Why waste time with brokers when you can get a quick cash loan from a direct payday lender?

As your credit card debt grows, your credit history can get worse and chances of you qualifying for traditional loans and credit cards become less. And even if you do qualify for a loan or credit card, it will have a ridicules interest rate with all sort of hidden fees which may further hurt your credit and keep you in even greater debt. It is called “debt to income” ratio. As your debt grows, the ration of your debt to your income widens to the point where you will be trapped in debt forever and only bankruptcy seems to be an option.

But what are the alternative ways to pay off your credit cards? We suggest payday loans.

The great thing about payday loans especially those from lender direct companies such as Pay1Day.com , is that there is no credit check. Your job and your income is your credit. By taking payday loans and paying them on time, you establish a trust with your payday loan lender, and can take frequent loans to pay off your credit cards. These loans help you pay more than just minimum payments to your credit card, hence you can pay them off faster. And as your debt reduces, your credit score gets better and better. True payday loans may have high fees at times, but that’s a fair price to pay to get rid of never ending credit card debts and improve your credit.

If you e-filed your taxes, you may get information 72 hours after your tax return efile is acknowledged and accepted by the IRS. You can check here to find out about the dates on when to get your direct deposit or mail in check by the IRS.

If you haven’t received your tax return check by the dates specified, you visit where’s my refund page. You can also call the IRS by calling either 800.829.1954 or 800.829.4477.

Please be advised that the dates IRS are not guaranteed so don’t depend on IRS if you need cash fast. You can always take a payday loan from us and since we are a direct payday lender, we can deposit your loan in your account within one business day.