I'm talking about those darn Money Mutual commercials with Montel Williams and Arsenio Hall. Really it's not just Money Mutual, there are several short term loan companies out there that really just need to stop existing. If you don't know or haven't seen them, here's the jist. A famous actor comes on TV asking if you're in need of some cash. "Of course," you think, "I always need more cash! Tell me more Mr. Famous Man!" Famous Man continues to tell you that you can get $1,000 today! You only need to make $800/month, have a job, are 18 or over, have a checking account, ***Plus other requirements! "Great! I have all those things! Mr. Famous Man, please tell me how I can get this too-good-to-be-true offer!"
Then they direct you to the website. Here their famous face is shining and the first thing you see! Good! You're in the right place. It asks you for some personal information, because how else can you be sure to receive the money? Now. Look closely. Did you read the Privacy Policy? Probably not. Read it here... My favorite part is The Way We Use Information. It goes on for days. By submitting your information, you give them the right to call you, text you, email you, send your information to other lenders, store your personal information electronically, use your SSN to get your credit reports and history, verify your eligibility for not just a loan, but other offers they may have, and the list goes on and on.
OK so let's say you say, "What the hey, I need that money now!" So you sign up, get approved and poof! $1,000 is in your account the next business day! What could go wrong now? Well, your next payday you'll be getting a bill or an auto debit from your checking account for the $1,000 + their fees/interest they charge. Money Mutual says they don't know how much it will really cost you because it's up to the individual lenders. True. But their FAQ on that topic really breezes over that it will cost you more, how soon you'll need to pay the money back, and how much interest you'll be charged. What if you can't pay back this first $1,000 you borrowed? No problem, just ask for an extension! Of course they'll keep charging you the interest..
Now, before some of you jump down my throat saying "But sometimes people really have an emergency and need cash right away!!" Yes. That is true. But that is probably NOT the most popular reason people go for cash advances. I wish I could conduct a study of what people use the money for. It would be anonymous of course, but I'm sure it would be really interesting. Did they need to make a vital car repair? Did they have to pay for an ambulance ride? Did they want a new big screen TV? These questions may never be answered.
So how do we combat these, what I believe to be, predatory advertisements? Education. Inform people of the risks and extra costs of these types of loans. Make sure they know to research other options before using a cash advance. Plan ahead - if you aren't having any financial troubles right now, great! Put some of your cash into a savings account that you don't touch and can access for emergencies. If you're already in debt, find a place you can go for a free financial planning session. Work on creating a budget that allows you to pay down your debt. Cut out unnecessary expenses. Shop with coupons.
The more you educate people about their finances, the less likely it is that they will take steps towards the swirling spiral of debt issues. Or at least that's what I believe. The best way to lend is by lending a helping hand.
Next on my "this steams my clams" segment: CRaZy FrEe LapToPs promotions! GET A FREE LAPTOP.... just sign up for 20 different offers, that may or may not cost you hundreds of dollars anyway.
