Money Crashers: Payday Loans – Biggest Dangers & Better Alternatives

I got the idea for my latest Money Crashers piece after reading an article in The Atlantic about payday loans. This piece discussed the dangers of this type of loan, which hits people already in desperate financial straits with crippling interest, but also pointed out that people take out these disastrous loans for a reason: they need the money, and most mainstream banks aren't willing to give it to them on more reasonable terms. Bad as payday loans are, The Atlantic argues, there just aren't any better alternatives.

John Oliver, however, begs to differ. His marvelous segment about the evils of payday loans concludes with a mock public service announcement in which Sarah Silverman urges viewers to consider a "great alternative" called "AnythingElse." Unfortunately, the ideas she goes on to suggest—including selling sperm or blood, walking in front of a car in hopes of a generous settlement, and shoplifting—are generally impractical, unethical, or both.

So in my article, I've attempted to outline some realistic alternatives for people who need cash in a hurry. I take pains to point out that many of the alternatives I suggest—such as pawnshops, credit card cash advances, and hitting up family members for a loan—are terrible ideas under normal circumstances. But when compared to a payday loan at 400% interest, they're decidedly the lesser of two evils.

How Payday Loans Work – Biggest Dangers & 14 Better Alternatives