Are Loyalty Customer Rates a Bonus or a Scam?

If you’ve had any experience at all with the paycheck advance industry, you may have reached a point where the people at the centre are happy to see you and call out your name whenever you walk in, or the nice bloke on the phone asks about your family whenever you call. When you reach this state of familiarity with the industry, having successfully paid back paycheck advances several times without incident, sometimes these lenders will offer “customer loyalty rates” which are lower than the initial rates given out for loans. Are these loyalty rates worthwhile, though, or are they merely a scam intended to keep you hooked once you’ve started in with the business?

They are significantly less expensive

Even a discount of 15% on such a high-interest rate loan, can make a significant difference in how much you are paying. For example, a £500 loan that would normally charge you £15 per £100 means that you would have to pay back £575 for your £200 loan. However, a 15% loyalty discount on that loan would mean only having to pay back £11.25 less for the loan. That’s a tidy little family meal at the local eatery.

The loan is still very expensive

In our previous example, you saved a good amount of money by using a customer loyalty discount, more than enough to buy your gaffer a good Yule present if you want, but overall, you still paid an interest rate nearing 500%. A conventional bank loan would just as soon as saved you most of the fee you paid for that loan in the first place.

Aren’t there other discounts elsewhere?

I guess it goes to show just how much loyalty really matters to many of these paycheck advance centres when they will offer a ‘first-time’ discount to new borrowers as well. This discount for new borrowers is often the same as the discount offered for loyalty customers. That being the case, if you sign up with a paycheck advance with one center, you may be best off just looking for another one with a new borrower discount for your second loan.

There is no question that if you find yourself in dire need that a paycheck advance is a passable way of getting out of a scrape. The loyalty customer discount, however, doesn’t seem to be a goal one should exactly be striving for, and if you find yourself taking out that many loans to where you are offered one, perhaps it’s time to take a second look at your spending habits.