Bank Overdraft fees vs Payday Loan fees

Payday advance and payday loans have become much more popular because they can be very useful to a consumer who finds himself or herself strapped for cash and has tried every other way to obtain needed funds such as asking to borrow from a family member, friend, or even one’s employer.  If you have found yourself maxed out on credit cards and unable to seek any more help from others, you might have even tried to get an overdraft on your bank checking account.  Well, at this point you find yourself having to make decision.  Should I apply for a payday loan or payday advance if I need cash fast or should I try to get an overdraft from my checking account?

So, first, let’s take a look at what an overdraft is. An overdraft means that there are not sufficient funds in your checking account to cover writing a check or using an ATM machine to withdraw the cash you need now.  In a way, it can be thought of as a quick emergency loan.  However, in order to qualify for an overdraft, you must have overdraft protection but that is at the discretion of the bank.  That means that your checking account would have to be linked to another kind of bank account such as a savings account or credit card account with that bank.  In other words, the bank wants to make sure that in the event you make an overdraft to your checking account that you have enough funds in other accounts to cover it. In that event, the bank will remove the amount of the overdraft from your other accounts when there are not sufficient funds to cover it in your checking account.  Whether you are given overdraft protection when you sign up with a bank or whether the bank will extend you a specific line of credit if you do not have other accounts,the bank will charge you for the right to use their money to cover your overdraft.  The policy of the bank may be to charge multiple overcharge fees that are not in line with the amount of credit they extended you. That could mean that you will pay large fees for even small overdrafts. For example, it is possible that you could be charged an overdraft fee of $10 for an overdraft transaction of $20 or less, or even a fee of $33 for an overdraft that exceeds $20.  This could also mean that the bank will charge you multiple overcharge fees per day.  It is also important to know that the federal government does not limit the size of the fees a bank can charge you for an overdraft. You might want to look at an overdraft as if it were a “bounced” check fee.  And until you cover what you borrowed, the bank might wind up charging you a fee everyday until you are able to pay them back.  So, even though overdraft services seem to be useful to customers to deal with a temporary short term cash flow shortage and enable them to get the cash they need fast due to an emergency, the bank can charge large fees for that service.  That is because they see it as a short term loan because you are borrowing their money to cover an emergency or an unexpected expense that you did not count on.

So, now let’s take a look at a Florida Payday Advance or Florida Payday Loan and see how it compares.  A Payday Advance or Cash Advance Loan in Florida is regulated by the Florida Banking Department.  They set the fee and the fee is governed by the Statutes of the State of Florida.  In other words, the company that will provide you with quick cash cannot increase the fees they will charge you for borrowing funds. You can ask them what the fee is. Also, you can apply for a Payday Loan or Payday Advance Loan 7 days a week and 24 hours every day from your home, workplace, or even your IPod.  You do not have to make a special trip to the bank during your lunch break. When you decide to apply for funds online, you can check the settings and functioning of your internet browser by looking up at the toolbar and it will tell you that you are on a secure website with a security icon and some other symbols.  You can read some of the blogs and other information on the company’s website to familiarize yourself with the company and how they do business.  If you need cash now, you will not accumulate multiple fees per day or even large fees for a small transaction when you compare them to the bank.  Of course, you should always try to be financially responsible and repay the funds you borrowed as quickly as you can.