It’s a fact: Taking your old jacket out of the closet and finding that random ten-dollar bill in the pocket is the BEST part of fall. Well, okay, maybe not the best, but it’s up there.
That’s the thing about cash: It’s fun, spendable, and great to have in small amounts. Carrying a little cash on hand can feel good, but carrying around a serious amount can be annoying at best and dangerous at worst. That’s why most of us don’t carry much cash anymore. In fact, two out of ten Americans carry less than $20 cash on a daily basis. We’ve switched to other forms of payment that are safer, easier, and more responsible.
According to a recent Federal Reserve Payments Study, 67% of consumer payments in 2012 were made with debit or credit cards, up from 43% in 2003. And with the rapid growth of mobile payments, like tap-and-pay Google Wallet and Apple Pay, lots of businesses are moving away from cash too. A recent report by Javelin Strategy and Research found that 66% of in-person sales are made without cash, and the trend is continuing. In fact, certain airlines, hotels, restaurants, loans in Illinois stores and merchants are now adopting “cashless” policies and only accepting electronic payment.
The basic fact is we don’t need cash in hand the way we used to. So why do lots of small-dollar lenders make such a big deal about giving us loans in cash?
Take a look at the advertisements for your neighborhood payday or title lender, and you’ll probably find the word “cash” featured front-and-center. But with a society that’s becoming more and more cashless by the day, the promise of a cash loan is becoming less and less enticing. And it’s not like these loans don’t have their downsides, either. You might leave that storefront lender with a few hundred “new” dollars in your wallet, but what’s it going to cost you when it’s time to pay that money back?
Now that cash isn’t what it used to be, here are some of the “fast cash loan” providers you’ll want to avoid:
- Payday Loans: Payday loans are unsecured, small-dollar loans available at storefronts or online. They usually come with short terms (only 14-days) and astronomically high Annual Percentage Rates (APRs)! Sure, you can walk out with cash, but many borrowers find themselves trapped in debt for almost 200 days per year!
- Title Loans: Selling your car is one thing, but using it to get a title loan is another. Title loans are cash loans secured with your auto title (or motorcycle, or boat). If you can’t repay the loan, the dealer can repossess your collateral (your car!). So along with those high-interest rates and extra fees, you also run the risk of losing your ride.
- Pawnshop Loans: You know that family heirloom you’ve been entrusted with? If you want to keep it, avoiding pawnshops will help. Pawnshop loans require handing over a valuable piece of personal property to secure a small dollar cash loan. You get to leave the store with cash, but your property stays behind. If you fail to repay, your valuables will be sold to someone else (who frankly isn’t going to appreciate that Black Velvet Elvis painting correctly).
- Cash Advance: There are several different types of cash advance loans and none of them are good. To get a cash advance, you can either borrow against your credit card (at a higher than normal interest rate), try to secure a paycheck advance from your employer (an awkward conversation neither of you will enjoy), or pursue any number of the “cash advance” consumer loans available from storefront lenders. Skip the hassle, skip the pain, and skip “cash advances” altogether.
Borrowing money is a serious decision. It’s always advisable to do your research and make a responsible choice that’s based on your financial reality-not the needs of the moment.