Knowing the Risks of Payday Loans

By: Carly Stephenson Email
By: Carly Stephenson Email

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HARRISONBURG, Va. For people short on cash, payday loans may see like an easy way to come into money; however, these loans come with high interest rates.

Thomas Rea, the vice president of commercial lending at First Bank and Trust, said you really want to be careful with non-traditional loans.

He said family and friends can be a resource if you need help with money.

Smaller community banks, such as First Bank and Trust, have no affiliation with payday loan businesses.

While Wells Fargo and Bank of America lend money to payday loan businesses, according to Reinvestment Partners, an advocacy group.

Rea said going for high interest loans if you're desperate isn't the best option.

"If you're using something like a payday lender to take out money to pay for Christmas or even if you're using credit cards or layaways or some of the more traditional forms, you've got to take into effect the interest you're going to pay. Sometimes just being there for them, you know the actual cost of the gift is not what the meaning of Christmas is all about anyways," said Rea.

While credit cards can help temporarily fix a problem, they can build interest as well.

If you're making a big purchase, such as buying a car or paying for college, a loan can be a good option.

To get a loan, you would need to fill out an application at a bank. The bank then determines whether or not you qualify based on income, credit history and other factors.

The applications can seem long, but part of that, Rea said, is because there are regulations and laws in place to help protect the consumer. is happy to provide a forum for commenting and discussion. Please respect and abide by the house rules:

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