The idea behind the Payroll Advance (PRA) is so simple it is easily
misunderstood. For a small fee (calculated as Interest by the Payroll
Advance Center)
you can borrow money for emergencies or personal reasons. There are no credit
or background checks required.
The Process of Borrowing:
Fill out a simple application
containing personal and employment information as well as bank account
information.
Wait while the teller
verifies the information you have given.
Based on how much you make,
you will be approved for a loan amount between fifty and five hundred
dollars.
Write a post-dated check for
the amount requested plus the required amount of interest.
Leave with your money.
The Circle of Debt
Besides the amount of Interest you pay out for the advance (which can be
anywhere between ten and twenty dollars per one hundred dollars loaned) you are
also sacrificing your future financial security. As you borrow, you promise to
make a payment from a future check, which takes more from that check than you
originally borrowed. This can provoke you to borrow once again just to pay
bills that would have been paid had you not borrowed to begin with.
The Sensible Payroll Advance
Use it only when you need it.
Don't re-borrow immediately.
Realize that you're going to have a short check and plan accordingly.
Don't borrow more than you
need. This will just result in a higher amount of interest.
Make sure you reflect the
check in your ledger immediately, even though the money won't be removed
for two weeks. You don't want a mathematical error to cost you even more
in overdraft or returned check fees.