Aren’t Paycheck Advances Helping the Poor?

With much of the news coming out about the paycheck advance industry focused on the fees and computed interest rates that are charged, many people tend to get the wrong impression of the paycheck advance process and the benefits it provides to many people. Properly managed, paycheck advances have helped people:

• Avoid even higher late fees for bills
• Avoid eviction from their homes
• Effect essential vehicle repairs in an emergency
• Purchase needed medicines and health supplies
• Avoid disconnection from essential utilities such as power or water

Paycheck advances work by allowing people to take out a short-term loan at increased interest rates quickly and with little or no credit check required. In as little as 24 hours a deposit can be made to a bank account and used to meet any kind of short-term or emergency need. The high interest rates of a paycheck advances are due to the quick availability and lack of underwriting required for the loans.

In this time of global credit crisis, the need for paycheck advances will probably grow even greater to help people with other needs such as stop-gap income between jobs. The increased difficulty in getting credit cards or loans that would assist with these needs, means that the paycheck advance industry has an even greater role to fill in helping to keep families off of the streets, or making sure that people can still get to work and keep their jobs during this time of increased competition for employment.

So while the news may sometimes focus on the ‘negative’ aspects paycheck advances and call for a reduction in the industry’s viability or ability to continue providing services, those with lower incomes throughout the nation often find themselves counting on this essential service to save themselves from a fate far worse than a high interest rate loan.