There are different payment methods accompanied by different benefits. Many methods provide maximum benefit but come with hefty interest rates. On the contrary, certain payment methods give you lesser returns but also charge fewer interest rates.
Usually, payment methods are associated with interest rates. It can be in the shape of credit card fees or monthly subscription charges. The question is which payment methods typically charge the highest interest rates? The answer is Payday loans. Payday loans are believed to have the highest interest rates among different methods of payments.
According to the Incharge Debt Solution, the personal loans, which have 14% to 35% of average income loans interest rates can reach as high as 391% compared to the credit cards interest rates, which usually average between 15% to 30%. This data marks payday loans as a winner when it comes to the highest interest rates being charged among their counterparts.
Payday loans are considered to be an easy solution to revamp a decrease in the general income. It is not the best idea to inculcate the lost income when you are on a tight budget but people still choose this option.
The reason why people opt for payday loans is that they can get the loan in a very short time plus there is not a very lengthy procedure required.
A registration form along with a personal identification document and the applying person’s bank details are needed during the application. At times, if the loan amount is not much, it is granted on the same day of the application. However, the amount varies from person to person.
The huge drawback of payday loans is that the interest rates inculcated are calculated by adding almost 15% to 20% on every $100 borrowed, which becomes a huge sum every month. Another set rule of payday loans is that if a person is unable to pay back the said amount in the given time frame; then an extra added amount is charged on the parent amount that one took as a loan. This becomes a huge burden on the borrower. Though one borrows a payday loan to avoid financial crises. However, if one is unable to fulfill the obligations that one signs during the application, it can push one deeper into a financial crisis.
As mentioned earlier, different payment methods charge different interest rates. Still, payday’s method of charging the interest rates concludes that payday loans charge the highest interest rates compared to prepaid cards, credit cards, or even cashier checks.