When my Foolish colleague Selena Maranjian extolled the virtues of banning payday loans for members of the military, I knew it was because she wants consumers to run their financial lives Foolishly. Cash advance checks usually come attached to your monthly statement, but they typically carry higher interest rates than purchases, offer no grace period, and come with a cash advance fee. Further, if you carry a balance on your credit card, any payments you make are typically applied first to your lower-rate debt, resulting in higher interest rates and total costs. We could also talk about the relatively low interest rate you could get on a straight bank loan for a few hundred dollars — except that small bank loans have pretty much disappeared. Payday lenders are about the only financial institutions willing to make small loans. All financial institutions make huge amounts of money on fee income — not just payday lenders. read more

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