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Due to the drastic fluctuations in the global economy, more and more people are experiencing financial difficulties and are forced to apply for loans in order to be able to cover their expenses until the next paycheck comes in. One of the most common solutions that looks very tempting at first glance is applying for a payday loan, as they are able to provide fast and easy money, with an interest charge that will be deducted from your next salary. But if the payday loans are such a good way to solve your financial distress, why have they been already banned in some eleven states of the United States of America?

Taking a closer look at how the payday loans work, you will notice that the interest you will have to pay for just a couple of weeks can rise up to thirty percent of the loan. Considering that you were to calculate this interest for an entire year, you will see that you can end up paying more than eight hundred percent of the initial value of the credit, which is more than someone who is already experiencing financial difficulties can afford.

Given the abovementioned facts, it is easy to see why companies that are offering this kind of credits can easily be seen as predators, especially since they tend to offer these deals mostly to people who earn a less than average income. Most loan contracts state that, in case the person given the loan will not be able to cover the debt on the next paycheck, the credit will be extended, thus increasing the interest and adding additional fees. Suddenly, all that easy money does not look so appealing anymore.

If you are experiencing money problems and your earn less than the average salary, the best idea is to find alternative means to balance your budget, as applying for payday loans is most likely to get you in more trouble than you were already in. For example, you can always ask your boss for an advance on your paycheck, since in this case you will not have to pay the borrowed money and an interest. At the same time, it is a good idea to start calculating your monthly or weekly budget and cut down on some of the unnecessary expenses, as even the most insignificant sums that you spend unwisely can add up to a lot more than you think.