The Truth About Payday Loans and Government Employees - OppLoans

The Truth About Payday Loans and Government Employees - OppLoans The Truth About Payday Loans and Government Employees The Truth About Payday Loans and Government EmployeesInside Subprime: Feb 4, 2019By Jessica EastoThe partial government shutdownâ€"the longest in US historyâ€"has highlighted that thousands of government employees can’t afford to miss a paycheck, and that when financial pressure starts building, they are at risk of turning to short-term loans, such as payday loans.More than 800,000 government workers have been without pay since the second week in January, not including millions of government contractors who have also been laid off during the shutdown. This is longer than most Americans can afford to live without a paycheck. According to a 2017 CareerBuilder survey, 78 percent of US workers “live paycheck to paycheck” and more than 1 in 4 do not set aside savings each month.More than 1,500 government workers have launched crowd-funding campaigns, while more than 10,000 have filed for unemployment and food stamps and others have turned to pawnshop loans. According to MarketWatch, some credit unions are offering loans or lines of credit with no fees or interest to help workers through their furloughs. However, not all government employees have access to those products and big banks are not making similar offers.When options are limited, government workers are forced to consider riskier options, liked joining the 12 million Americans who use payday loans each year. But according to CNBC, payday loansâ€"though easy to getâ€"are the worst option for government employees seeking to bridge their financial gaps.Why? It’s clear when you look at the annual percentage rate (APR) of payday loans compared to other financial products. Payday loans typically carry APRs of 400 percent or more, depending on where you live. Compare that to the average interest rates of credit cards (17 percent) or even credit card cash advances (more than 30 percent).Another unsavory aspect of payday loans is their quick repayment term. This is particularly risky to government employees d uring a shutdown with no end in sight, even if the government furnishes them with back pay. Payday loans are designed to be repaid on the day of your next paycheck, typically within 14 days. If you can’t make the payment, you may be offered the opportunity to rollover the debt for additional interest and fees. These can quickly lead to a debt trap that can be difficult to get out of.The best way for government employees to minimize their exposure to the risks of payday loans is to understand their finances and learn how to avoid predatory lending.For more information on scams, payday loans, and title loans, check out all of our state-by-state Financial Resource Guides.For more information on  payday loans, scams, and  cash advances  and  check out our city and state financial guides  including Florida,  Indiana, Illinois, Kansas,  Kentucky, Missouri,  Ohio,  Texas and more.Visit  OppLoans  on  YouTube  |  Facebook  |  Twitter  |  LinkedIn