Bailing out Your Bank Account With Payday Loans Posted at 9/29/2010 03:53:00 AM 0 comments (+) In recent years, most financial institutions have dramatically raised their personal banking overdraft and check-bouncing fees. I didn't realize how much they were charging people until I had the unfortunate experience of having a negative balance. While there's no excuse for poor financial management, issues arise throughout your life that you just can't control. Despite the situation, whether self inflicted or unforeseen act, there must be a way to avoid a negative balance.

According to the bank, it doesn't matter if your $1 charge for a soda at 7-11 or a $50 check to keep your electricity on caused your account to plunge into negative territory. Contacting the bank usually has little to no effect on your account, but some financial institutions will reimburse one overdraft charge per year. The charges do not end there, as other payments and charges could still enter your account, resulting in additional overdraft fees.

You would think the bank would deny payment, but their systems take up to 72 hours to refresh your account details. Before you can control the situation, you are hundreds of dollars in the red. Consider the overdraft charges on five transactions of $1 to $30, assuming you did not spend radically beforehand, knowing funds were low. Theoretically, you could pay $175 in “interest” to the bank for transactions costing less than $150. If you thought payday loans have high interest, think again!

Like any financial lender, payday loan companies charge you a fee for them to “front” you the money. For example, a $500 payday loan may cost $600. Paying $100 in interest is nothing when compared to 3-4 overdraft charges on your account. Additionally, you know must be paid back, whereas the banks can continue to charge you until the system updates your account status.

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