Money Blue Book

The credit crisis is bumming me out. Because of the current economic recession, an important source of free money and money making opportunities has all but dried up on me and pretty much everyone else in the country. I’m talking about lucrative balance transfer credit cards – namely, the once abundant credit card terms and conditions that offered amazing 0% APR balance transfers for 12 months with no pesky balance transfer fees.

Ever since I first started getting into the world of personal finance blogging and common sense financial planning, balance transfer credit cards have always been one of my favorite consumer financial instruments. Balance transfer credit card arbitrage is actually what got me started with personal finance blogging  to begin with. Over the years, they have served me well, netting me substantial balance transfer arbitrage profit in the way of high yield bank interest income, and cushioning me during difficult financial times by providing me a way to get quick interest free loans as a financially struggling young lawyer. During tough economic times in my life, they helped me bridge temporary budget shortfalls, saving me from having to turn to high interest risky alternatives like payday loans. My early life would actually have been more difficult and harsh had it not been for the safety net benefits and financial assistance provided by 0% balance transfer credit cards. During key moments in my life, these short term interest free credit card loans helped preserve my financial independence and saved me from having to turn to family for monetary handouts.

In The Beginning: The Good Old Days Of Lucrative 0% Deals For Credit Card Balance Transfers With No Balance Transfer Fees

Back in 2000 and shortly after the economic collapse that followed the terrorist attacks of 9-11, the U.S. economy ushered in a Renaissance period of sorts in terms of credit offers. During that period of time, lucrative and juicy pre-approved 0% APR, no interest credit card loan offers were simply everywhere – on college campuses, stuffed in mailboxes, and found everywhere online. Wanting to make sure they didn’t miss out on their share of the very profitable credit card market, the major card issuers promoted all sorts of 0% APR teaser offers to attract new customers. The goal was to tantalize new applicants with introductory offers and ultimately turn them into long term cardholders and spenders. Eventually, this sparked fierce competition among the card issuers as each one introduced its own versions of the classic 0% balance transfer deal. The market competition led to great increases in the length of the promotional 0% period, rising from an initial 6 months to 12 months or longer.

Eventually, some cards even extended the 0% balance transfer periods indefinitely, leading to what ultimately amounted to a 0% balance transfer for life credit card offer. The only thing keeping the balance transfer tidal wave in check was the existence of balance transfer fees, usually set at the customary rate of 3% of the total amount transferred. However, with continued rabid competition, the credit card issuers eventually collectively waived the once pervasive balance transfer fees altogether. The elimination of balance transfer fees resulted in a credit card free for all. With no out of pocket fees or upfront costs to contend with, balance transfer arbitrage seekers eagerly ate up the ever expanding offers.

The tremendous wealth of balance transfer deals led to the rise of skilled balance transfer arbitragers and App-O-Ram’ers – individuals who ravenously sought out 0% balance transfer credit cards to make a quick profit (God bless capitalism at its finest). The credit card arbitragers would rapidly apply for as many 12 month 0% balance transfer cards with no balance transfer fees as possible within a very short period of time (hence the App-O-Rama nickname given to the process). By rapidly applying for a high number of card offers simultaneously, applicants would be able to greatly minimize the sequential credit hits on their FICO credit score, and preserve their ability to take advantage of future 0% balance transfer deals. The most hardcore of balance transfer arbitragers oftentimes would apply for more than 5-10 new credit cards at a time in rapid succession to complete the arbitrage cycle. With the 0% credit card offers in hand, the balance transfer applicants would transfer the credit card balances into high yield bank accounts to earn interest free money (thus enjoying full FDIC insurance coverage while earning stable bank interest income at the same time). Thus for the duration of the balance transfer offer (often at 12 months or longer), the App O Rama had the potential to allow the savvy credit card user to earn quite a bit of money by not doing anything more than taking advantage of free loan money at zero interest – the very definition of arbitrage, which is the process of taking advantage of an inefficient imbalance in market equilibrium.

Today: The Housing Collapse, Subprime Lending, and The Credit Crisis Have Ended The Era Of Easy Balance Transfer Money

One could argue that the period of amazing credit card offers during the early part of this decade was actually a disaster in the making – the unsustainable spark that triggered an out of control credit market that would ultimately consume the entire financial investment banking sector, conclusively wiping out pillars of American investment and banking might such as Bear Stearns, Merrill Lynch, Countrywide Financial, Washington Mutual, and Wachovia Bank. With the way the credit markets are now, it’s unlikely the glory days of awesome credit card offers will return anytime soon.

With the housing market implosion came credit defaults and ultimately the closing of the credit lending spigot. As the economy and housing market has tanked, personal bankruptcies and defaults on credit card payments have risen sharply, causing credit card issuers to panic, and drastically scale back credit card offerings. Major credit card companies have all pretty much stopped waiving the 3% balance transfer fees imposed on all transferred card balances. Many card issuers have even eliminated the maximum cap on the balance transfer fee levied, rending many balance transfer offers essentially useless for profit seeking arbitragers. With a 3% balance transfer fee with no maximum limit, those who transfer large balances face the prospect of having to pay extremely high fees – making these offers substantially less attractive than they once were.

These days, the credit landscape continues to change. So long as we continue to be mired in this catastrophic credit crisis, the existing terms and conditions of current credit card and balance transfer programs are unlikely to greatly improve anytime soon. While the credit crisis has pretty much put a severe damper on balance transfer arbitrage activity, those who seek out 0% credit card offers for financial assistance reasons are still in luck. Because of the extreme profitability of the credit card industry, such offers have not completely disappeared. Major credit card issuers know they must continue to attract new credit card applicants and consumers through the dangling of attractive zero APR carrots. While credit card seekers ought to know that such offers are getting much harder to find, they are still around – you just have to know where to find them. Those who want to maximize their zero balance transfer limits to either make money on balance transfers or use them to pay off high interest credit card debt need to adopt more creative approaches such as using multiple cards or extending periods by applying for new offers as old ones expire to keep the 0% rate going. Of course, this is all highly prerequisite on maintaining a stellar FICO credit score. Anything you can do to raise and boost your FICO score will help you in the long run in terms of qualifying for balance transfer credit card promotions. Be sure to monitor your FICO credit score for free.

Currently, most of the available offers are not as lucrative as they once were, with shorter introductory periods, and the imposition of balance transfer fees, but fortunately many fees are often capped with a maximum limit. For those transferring large 0% credit card balances, paying a fixed maximum amount of $75 or so is likely worth the interest savings. For those searching for balance transfer deals, the following may interest you:

• My complete list of all updated 12 month 0% balance transfer credit card offers available in the market.
• All available 6 month and 12 month 0% balance transfer credit card offers with no balance transfer fees.
• My personal recommended selection of the best balance transfers for money making and emergency fund purposes. These cards are the best in my opinion based on my evaluation of term conditions and capped fees. Many of the cards even offer 0% introductory APR for credit card purchases.

Updated List Of The Best Credit Card Cash Back Rewards For Google Adwords, Yahoo Search Marketing, and MSN AdCenter

As a personal finance blogger and a dot com mogul-super affiliate tycoon wannabe (I’m joking), I regularly spend sums of money on domain name registrations, web hosting services, and home office computer supplies. However, the bulk of my tax deductible business expenses consist of expenditures for online advertising through top search engines like Google, Yahoo, and MSN. While compared to the big boys (and girls) my advertising budget is comparatively puny, I still seek to maximize my money however I can, whether that means utilizing free promotional coupons for extra savings and free online advertising, or taking advantage of credit card offers to earn cashback rebates on Google Adword purchases.

Online Advertising Through Pay Per Click Works, But It Can Get Expensive Depending On Subject Niche

Those who are familiar with online advertising know that there are a variety of ways and methods to get your website brand or blog name into the search engines and thus into the public eye for maximum traffic. However, this doesn’t necessarily mean that all of the methods are created equal. Currently the most popular search engine with the most capability to leverage the most search traffic by far is run by Google. But while the Google Adword program’s certainly the most dominant player in the online marketing world, there are also other lesser options worth mentioning – most notably Yahoo Search Marketing and Microsoft’s MSN AdCenter. Neither Yahoo Search nor MSN AdCenter are likely to topple the 800 pound gorilla of Google Adwords anytime soon, but the smaller search sites still own a small, albeit dwindling piece of the search engine pie.

For those who spend money on internet advertising through Google, Yahoo, or MSN, probably the bulk is spent on paid text link advertising or pay per click (PPC) promotional campaigns. Both paid text links and PPC advertising are used by many bloggers and website promoters to generate traffic needed to convert organic search traffic into profitable affiliate sales. Personally, I highly advise against engaging in buying or selling paid text links, and refuse to engage in paid text link buying or selling myself. The frowned upon practice is a form of marketing suicide in my opinion, and is the number one way to incur the wrath of Google, which sees the buying and selling of paid backlinks as a form of guerrilla attack on the integrity of the Google search engine algorithm.

In contrast, pay per click advertising and the purchasing of approved advertisement links through Google, Yahoo, or MSN’s network of publisher banners and ads are proven and permitted ways to drive website traffic. However, as anyone who engages in pay per click advertising or other affiliate marketing means through Google Adsense or Yahoo Ads knows, the cost to promote a successful PPC ad campaign isn’t cheap. While newbies to internet advertising are unlikely to spend much money initially (a few hundred dollars a month at most), larger scale promoters frequently spend upwards of hundreds to thousands, or even hundred thousands, of dollars on monthly pay per click advertising alone.

Use Credit Card Rewards To Save Money On Online Business and Advertising Expenses (Google Adwords, Yahoo Search Marketing, MSN AdCenter)

Smart business types should always try to find ways to minimize business expenses and utilize as many discounts and promotional offers as possible to net the greatest overall profit. One of the best ways for bloggers and affiliate marketers to save money in this area is to maximize and strategize their use of credit cards rewards. Presuming you are savvy and responsible with your usage of credit, and maintain a respectable FICO credit score to boot, reward credit cards are essential ways for online entrepreneurs and advertisers to maximize their small business spending. Surprised that there are credit card reward programs dedicated and suited for web based businesses and online marketers? Don’t be! While Yahoo and Google credit card advertising rewards are not as well known as say, credit card discount programs for groceries and gas, the area is a steadily growing (albeit not fully tapped) segment of the credit card rewards market. Currently, most of the best cash back credit card rewards for bloggers, webmasters, and internet marketers are not widely advertised, and to get the details requires some digging, which I’ve done below.

For the tax minded business folks who wonder if there is an income tax on credit card rewards or aren’t sure whether one is obligated to report all cash back rewards and point rebates earned through the use of credit cards, rest assured – there is no such tax. Credit card rewards earned by consumers and businesses are viewed as purchase incentives by the Internal Revenue Service (IRS) in the nature of discounts and coupons, not subject to personal income tax liability. So don’t miss out on the cash back savings and discount potential of specialized credit card incentive programs designed to help you finance and pay for your online advertising and promotional efforts.

1) Google Adword and Adsense Pay Per Click Advertising – Get Up To 5% Cash Back With Reward Credit Cards

Until the day Google announces the release of its long awaited Google credit card and starts up its own Google credit card rewards program, the following card offers are your best bet when it comes to earning cashback for money spent on Google advertising. Personally, I can’t wait for Google to come out with its own Google credit card and would be the first to camp out in line for something like that – I’m quite the Google fan. Just the thought of earning Google rebate rewards on a percentage of all Adwords expenditures and the ability to redeem points for either cash or Google branded products like T shirts, mouse pads, and even portable Google fridges would be quite lovely. I used to carry around a Yahoo credit card back when Yahoo offered its own card program. When they eventually discontinued the Yahoo credit card rewards program, I was sad to see it go. It was pretty neat being able to redeem points for cool Yahoo T-shirts and other merchandise – techie stuff you couldn’t get anywhere else.

In the meantime, for those of you who spend a lot of money or even just a little bit on Google Adwords and Google Adsense advertising, here are the best credit cards cards to help you save money and get cash back rewards on your PPC advertising efforts. The rewards you earn can be used for whatever you wish, including plowing them back into more PPC marketing. While Google does not currently have any special deals with any particular credit card issuer to offer Google discounts, there are a few specially suited cards for such purposes.

1. Advanta Platinum BusinessCard For Online Marketers – Also known as the Advanta Platinum Business Card With Customized Cash Back Options, this card offers cardholders the ability to earn as high as 5% cash back on all online marketing expenditures. It’s probably the best overall reward credit card for new bloggers and affiliate marketers who are just getting into the PPC advertising scene. The expenditures that are covered include Google Adwords, Yahoo, MSN Search, and eBay fees. The Advanta rewards program also covers office expenses as well. The high 5% rebate rate is only provided for the first $1,500 of qualified expenditures, and after that it’s a tiered 1% cashback on everything spent.
2. Advanta Kiva Business Card – With the Kiva business credit card offer, online marketers get to earn up to 5% cashback on money spent on online advertising services like Google Adwords or Yahoo Search. There are no restrictions as to which affiliate or ad network must be used. The card also earns up to 5% cashback for business office related expenses like gas, computers, utilities, and even charitable contributions. There is also a nice 0% balance transfer offer for 15 months.
3. American Express Plum Card – With the highly advertised Plum Card from American Express Open (the Plum card yogurt commercial is everywhere on TV these days), you get an astounding 2% cashback rewards on everything purchased with the card if you pay within 10 days of your billing cycle. The catch is you’ll need to spend above $5,000 a month with your Plum credit card. Anything less and you’ll only earn 1% cashback. Of course, the card was designed for big time spenders and small businesses with high expenses. If you spend a lot of money on Google Adwords or other forms of advertising, you may want to think about the Amex Plum card. There is a hefty $185 annual fee that’s waived for the first year, but it’s easily worth it if your business spends a lot of money on online advertising or other business expenses.
4. Fidelity Rewards Signature Card – While the card requires a Fidelity Investment broker account to maximize rewards earning potential, if you’ve got one or are willing to sign up for one, you can earn 1.5% cash back on all your online advertising efforts. Actually, coupled with a Fidelity account, the card allows you to earn an effective 1.5% cashback on all products and services you purchase with the card, with no category or store limitation. Most comparable card programs only offer 1% back for general purchases so if you are a major spender, this is an ideal and recommended card to get. The Fidelity Signature is one of the reward cards I use on a regular basis.
5. Chase Business Cash Rewards Card – With the Chase Business Cash Rewards offer, online entrepreneurs and small business owners can earn up to a tiered 5% cashback on all purchases with no merchant or category restrictions. Your rewards earning potential is unlimited and there is no restriction as to how much you can earn. Your cash back percentage rate rises and falls depending on how much you spend per month. For online marketers who expect to spend more than $2,000 a month on Google Adwords (that’s when the high 5% kicks in), this is a nice card to have.

2) Yahoo Search Marketing – Get 5% or More CashBack Savings Using American Express Business Credit Cards

Currently, savvy online entrepreneurs have the ability to take advantage of American Express’ Open Network Business credit cards to net themselves more than 5% cash back rewards when they spend money on Yahoo Search Marketing services. Through a special partnership between Amex and Yahoo announced not too long ago, American Express business credit card users will now get to enjoy a 5% discount on all their Yahoo based advertising and web promotional expenditures simply by using their Amex business cards. This not only includes pay per click advertising using Yahoo’s Search Marketing, but also includes Yahoo publisher services ranging from web site hosting, e-commerce, to domain name registration.

While Yahoo is not the most popular or even a serious contender in second place, its PPC advertising fees are substantially lower than that charged by more popular services like Google Adwords where greater bidding competition among advertisers drives up promotion costs – making Yahoo a cheaper, but still viable alternative. Besides, it’s good to diversify one’s advertisement methods. One can even take credit card rewards one step further. Currently, there are certain select Amex business cards that offer even more lucrative rebate rewards on top of the existing 5% discount for Yahoo services. All of the following American Express Open business credit card offers below offer additional cumulative rewards on top of the 5% discount on Yahoo Search Marketing:

1. Blue Cash For Business Amex Card – With this high earning business credit card offer, you have the potential to earn up to a tiered 5% cash back rebate on eligible special category purchases. For everything else, including PPC advertising expenses, you get a tiered 2.5% cash back rewards rate. The special purchase categories include gas stations, drug stores, and supermarkets. In addition, Amex business cardholders also get to enjoy the usual Amex Open network savings on free hotel stays, car rentals, and airline travel.
2. American Express Business Gold Rewards – This popular premium small business card with no preset spending limit can help you save up to 25% off your business expenses. There is an unlimited rewards earning potential on purchases and your Membership Rewards never expire.
3. American Express Platinum Business Card – This business card from Amex is a popular choice to earn purchase rebates redeemable for retail, entertainment, and dining rewards. There is no annual fee and there is no limit to the number of points you can earn.
4. American Express Simply Cash For Business – You can use the card to earn 5% cashback on wireless services and home office supplies (like laptops and office gadgets). You also get 3% cashback on gas and 1% for everything else. There is no annual fee and no rewards limit.

3) MSN AdCenter – Get 3% Cash Back Rewards By Using Mastercard Business Credit Cards

Currently, Microsoft’s MSN AdCenter has a partnership with Mastercard’s network of business credit cards to offer MSN AdCenter advertisers 3% cash back rewards on money spent. While American Express is the card of choice for most business owners, the MasterCard partnership with MSN AdCenter makes Mastercard sort of a must have for heavy or even mild users of MSN’s advertising network.

To be eligible for the 3% cash back savings, Mastercard business credit card holders need to register and enroll their cards into the Master Card Easy Savings Network. While fairly straightforward, you can review the MasterCard Easy Savings FAQ if you need more info about the program. Keep in mind, along with the 3% rewards you can earn on all MSN AdCenter expenditures, you still get to earn the usual credit card rewards (if offered) on top of that. This has the potential to effectively boost your total reward earning percentage way past 3%. Here’s a list of the best Mastercard business credit cards for MSN Ad Center affiliate marketers and pay per click advertisers:

1. Advanta Platinum Business Customized Rewards Mastercard – This business credit card option by Mastercard is your best bet when it comes to maximizing your MSN AdCenter savings and online advertising spending in general. Along with the ability to earn 3% reward savings on all MSN AdCenter expenditures, you also get to earn an extra 5% cash back rate (with purchase limits) on top of the 3% for money spent on fees with online advertisers and merchant sites like Google Adwords, Yahoo, and even eBay. You also get cashback rewards for money spent on utilities and telecommunications, not to mention additional business savings for computer electronics and related office supplies as well.
2. Chase Business Rebate Mastercard – Earn up to 3% cash back on office supplies, restaurant dining, gas, hardware, and home improvement expenditures. Currently there is also a long 15 month 0% APR balance transfer promotional period as well.

My Advice and Guide To The Risks Of Using Pay Day Cash Advance Loans

When it comes to the subject of money and finance, certain things seem to inherently come with bad raps, and it’s not always deservedly so. As someone with a legal background, I feel that I’ve been naturally trained and conditioned to reflexively see both angles of a debate. Generally, I can take either opposing positions of a controversial issue. For example, when it comes to credit cards, I can see both the negatives and the positives. Some see credit cards as the scourge of consumer debt, and the ultimate symbols of excessive consumerism and financial servitude, responsible for trapping generations of consumers into irresistible cycles of minimum payments and high interest credit card debt. But at the same time, I can also see the rewarding aspects of credit card usage – the ability to use a powerful and versatile financial tool to not only build much needed credit history, but to make money and earn cash back rewards through responsible use and management.

However, even with a self proclaimed balanced view towards the use of semi-controversial financial tools for arbitrage profit and monetary gain, there are some practices out there I am reluctant to defend. Currently, I’m loathe to take a positive stance when it comes to the area of payroll advance loans and high interest short term cash advances. While I begrudgingly admit that payroll cash advances do serve a certain purpose and that there is an unmet need in the marketplace for their existence, I still see them as the pinnacle manifestations and ultimate symbols of financial distress, familial desperation, and loan sharking. Allow me to share some of my research and thoughts on the matter.

What Are Payroll Advance Loans and Where Are They Obtained?

Payday advance loans are a type of very high interest, short term cash loans used by lower to middle income people with jobs, usually during times of great financial turmoil and desperation. Payday loans have many names either formally or colloquially, including – cash advance, quick cash, post dated check loans, payroll advance loans, deferred deposit lending, and even loan shark advances. Pay day loans are almost always taken on by people who are experiencing some type of financial emergency and temporary cash shortfall that necessitates the use of risky short term loans to meet that monetary need. Oftentimes, consumers who find themselves pressed into seeking out payday cash advance loans do so because of their lack of preparedness to handle large bills arising from things like sudden medical expenses, unexpected car repairs, large electricity bills, and overextended rental payments.

Payday cash advance services can be found in most cities, at least in states that haven’t outlawed or made the practice illegal. While previously limited to stores found in low income neighborhood slums next to liquor stores, bail bonds, and gun depots with barred up windows, many are now poking their collective heads into well trafficked downtown area malls and mainstream commercial centers. Currently, payday loans can be obtained at many Western Union cash checking type stores, at standalone payday lending storefronts, and even in many pawn shops. As select states have gradually begun to legislate against the practice of payday lending, many cash advance stores are now bypassing individual states and heading online to do business. A great number of new payday loaners can now be found through search engines and pay per click online ads – the new frontier for customers and businesses.

Who Uses Payday Loans and Why Would Anyone Resort To Using Them?

So what type of person represents the typical payday loan user? The answer might surprise you. No, it’s not the drug addict, dead beat dad, or even the homeless guy who roams the streets, despite commonly held stereotypes to the contrary. The typical payday loan user according to some news research reports, and U.S. census bureau data from 2000 – is a lower middle class individual with a steady job, with average annual household income of around $40,000 who has bills to pay but has exhausted most financial alternatives. Thus it seems evident that payday loan consumers are generally not financial indigents or those who are unemployed. They almost always work a steady wage paying job, but struggle mightily with paycheck to paycheck living and their inability to pay down debt and deal with recurring daily expenses. However, the idea still persists in the public’s mind that payday lending stores prey upon the downtrodden through the use of predatory lending practices. In one of its many attempts to dispel the notion that the payday lending industry preys upon less educated, low income families, military personnel, and even immigrants, the nation’s largest payday lender, Advance America (link) (absolutely NOT an endorsement) points out that 90% of payday loan users have at least high school degrees with almost half of all loan applicants owning their own homes. While these statistics help to temper my perception somewhat, they don’t really change the negative opinion I hold about these risky, high interest financial traps.

In almost all cases, the eligibility requirements to receive a payday loan are all too easy to meet – you merely have to be at least 18 years old, have a steady job with reliable wages, have a funded bank checking account, and you must have appropriate financial documentation like pay stubs to prove your income status. While some lenders demand that cash advance borrowers possess a phone, have residency status, or have at least $1,000 or so of monthly income, in most cases, not much personal or financial information is needed other than documentation of income. Not even a credit check is required. By definition, consumers of high interest pay day loans are usually cash-only spenders with shoddy or ruined credit at best. Otherwise, they probably would have gone with credit cards or utilized more mainstream ways to acquire loans exhibiting more favorable terms.

How Do Payday Loans Work and Why Are These High Interest Cash Advance Loans So Fraught With Hidden Dangers?

Payday loans are usually obtained by the financially distressed via the many paycheck anticipation loan storefronts that dot the landscape and via the many payday loan websites that can be easily accessed online. While “more reputable” and socially accepted lending institutions like banks and credit unions usually require borrowers to undergo necessary hoops and hurdles to qualify for loans, payday lenders are notoriously well known for their service with a smile and the relative ease in the way they rapidly approve consumers for these risky high interest loans. The convenience of instant approval is why they are so attractive to the financially desperate. Customers are usually only required to provide the most basic of personal information pertaining to themselves, although sometimes they are required to provide some names and phone numbers of family and friends for reference purposes (presumably to track you down in case you don’t pay back your loan). The application and approval process frequently only takes minutes from inquiry to cash in hand. This rapid approval process is also how most payday lenders seem to justify their outrageously high transaction fee charges. Their explanation is that the high cost of quick approvals, assumption of higher default risk, and distribution of extremely short term loans demand much higher premiums on customers and require higher rates of return on loans offered for themselves.

Payday advance loans are offered by lenders for very short periods of time – usually anywhere from 2 weeks to 1 month at the very most (with the option to renew). Once approved, the applicant is required to write a check to the payday lender for the amount of the loan (usually anywhere from $100 to $500) plus an extra payday loan fee that the lender will ultimately keep. This is the where the devastating payday loan trap springs into action and why their use is so despised by many – the interest and payday loan fee that lenders charge is absolutely outrageous and insanely high.

Let’s say you want to borrow $500 for 2 short weeks to pay off your rent or some type of utility bill that is overdue. You have an employment payroll check coming in at that time that will allow you to pay the loan back plus fee. Most payday lenders will charge you a whopping $100 or more fee to lend you that amount. If you want to borrow $500, you will need to write the lender a post dated check for $600 ($500 plus the $100 fee), posted to be cashed in 2 weeks. The check is held by the lender to ensure you will ultimately pay. In the process, this creates an incredibly high potential annual percentage rate (APR) of (brace yourself) – 521% interest. No, that is not a typo – it really is that high. When the payday advance loan comes due in 2 weeks, the entire $600 is owed in full. However, pay day lenders frequently offer the option to roll over, or renew the loan. Instead of cashing the $600 when the short term cash advance comes due, payday lenders often encourage borrowers to pay another $100 fee to extend, or flip the loan for another two weeks. Oftentimes, cash strapped borrowers are unable to pay the hefty full $600 and are forced to pay the new fee instead. In the process, the borrower is not getting more money, but is merely floating and rolling over the same loan money he received in the beginning. If not paid in full as soon as possible, what started out as a small loan can quickly balloon into a monstrous debt.

The greatest payday loan danger occurs when consumers fall into this destructive pattern of chronic payday loan borrowing. The cycle of financial devastation can be potentially crushing. Just think – let’s say you took on that original $500 payday loan for 2 weeks and at the end of the 2 week period you were unable to pay off that loan plus the fee so you kept rolling the debt for 6 more cycles (2 weeks each) for a total of 12 weeks, or about 3 months give or take. By floating the cash advance loan 6 times, you’ll have paid out $600 worth of payday loan fees. At the end of the period, you’ll have to pay out an astounding $1,200 out of pocket cost to cover what was once a manageable $600 loan. If not paid off quickly, payday loans have the potential to make credit card debt seem like a minor nuisance in comparison.

The Growing Governmental Regulation and Legal Opposition To PayDay Advance Lending

It’s difficult for me to say anything positive or in defense of the payday loan industry despite my general willingness to let free market play itself out. After all, on some level it’s hard to deny that there is a thriving market for these types of short term, instant cash loans to pay down short term debt and bills. Instead of blaming payday loan companies, maybe we should be blaming the mainstream banks and credit card companies for not doing a better job of providing more accessible outlets for this type of consumer need. But regardless of the niche that they fulfill, in the interest of protecting the public from such imbalanced financial transactions and to shield people from such potentially predatory risks, many states are starting to crack down. Currently, some state legislatures have already made payday loans illegal and outlawed the practice. Many states are even in the process of enacting usury laws that impose caps and limits on the amount of interest that short term payday lenders can charge, effectively putting them out of business in those states. Currently, payday loans are illegal in the states of Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia (but this roster may change as prohibitive laws are challenged by lobbyists for the industry). While not illegal in Washington D.C., caps on payday loan interest of 24% APR (essentially a mere 92 cents on a $100 loan) has effectively driven out all lenders in the district. Other states have imposed mandatory longer lending terms to give consumers more of a fighting chance.

The dangers of payday loans and their perceived blight on society is also why the federal government has stepped in as well, into an area that has been primarily regulated by state governments. The United States enacted a law that became effective in 2007, capping short term cash advance loan interest rate to 36% APR for all military personnel, citing the terrible financial distractions and conflicts of security interest that they cause. While this rate cap may still seem pretty high, the rate restriction limit is mere pennies compared to the nearly 500% APR or more that payday lenders used to charge civilians, and military service men and women. However, as a result, payday stores simply stopped lending to military personnel altogether, forcing needy servicemen and women to look elsewhere, a rather disconcerting thought.

Of course, with the increasing regulatory efforts, many payday lenders have migrated onto the Internet, a rather disturbing trend, but perhaps a sobering reminder that their presence in some shape or another fulfills a need in society whether we like it or not. They may not be available now in all states, but financially desperate borrowers still seem to seek them out.

For those of you who insist on seeking out payday loans, I highly advise you to reconsider. There are options and alternatives out there my friend. While payday advances may seem attractive and easy to obtain, it’s a financial debt/death trap in waiting. Unless you are absolutely certain you have the means to pay off the short term loan in one loan cycle, don’t even think about it. Why not consider other more reasonable alternatives to payday loans?

Much Better Financial Alternatives To Getting A Pay Day Cash Advance:

• Ask your existing creditor, lender, landlord, or bill collector for additional time to pay your bill in full. This is the quickest and most recommended way to get yourself out of an immediate cash shortfall. Unfortunately, this option is not always dependable as not all of your existing creditors will be agreeable to this type of generosity.
• Borrow from your friends or family instead if you can. Put the short term loan in writing and back up your good word with future action.
• Perhaps you can request a one time or temporary pay advance from your employer. While it may not look good in the eyes of your employer to ask for a pay advance, desperate times do require more desperate measures.
• Get a short term loan from your bank or credit union, or apply for a 0% balance transfer credit card offer. If your credit score is still salvageable, the 0% balance transfer option is the recommended way to go. I’ve personally used 0% APR balance transfer cards to get myself through difficult financial jams before. Read this guide to 0% balance transfers if you don’t know what they are. Transferring existing high interest debt to 0% APR credit cards works.
• Try visiting a pawn shop instead. While pawn shops and pawn brokers still charge rather hefty interest and fees for loaning you money in exchange for collateral as security, their rates tend to be on par with that imposed by credit cards. If you must choose, I suggest going with a pawn shop instead of a payday storefront branch. It’s a bit more paperwork to come up with the right collateral, but the terms are better.

Where To Find The Best Payday Loan Lenders Online (If You Insist On This Course Of Action)

While payday loans do serve a need, always seek out better options first! I will admit I’m no expert when it comes to finding the best payday loan lenders. While I occasionally recommend sites in the form of affiliate recommendations, I’m extremely leery of inserting payday loan affiliate links here. Instead. you can find payday lenders through Google searches, online banners, website ads, and through the Community Financial Service Association (CFSA)’s list of CFSA member payday loan companies. Despite the organization’s name, the CFSA represents the payday advance industry’s interests completely and does not have your best interest as a consumer in mind. The list of approved payday loan companies is provided only as a useful resource and not as a recommendation of any of the companies listed.  While it’s a financially morbid choice I would prefer not to make, I’d rather you get financially ripped off by a “reputable”, industry-certified lender because you affirmatively decided you must get a payday loan, than get yourself ripped off and have your identity stolen via some unscrupulous and unknown payday loan scammer’s website.

After months of waiting and checking my mail box regularly like a little kid waiting for his video game to arrive, I was finally relieved to discover a little envelope from the United States Treasury yesterday – my long awaited 2008 Economic Stimulus Payment check had finally arrived! Cha-ching (punctuated with a few obligatory fist pumping motions).

Actually, about a week ago I had already been given written notice that the check was on its way. I received one of those pointless waste of paper junk mail letters from the Internal Revenue Service (IRS) letting me know that I was entitled to an economic stimulus payment check as provided by the Economic Stimulus Act of 2008, and to expect its arrival in a week or so. The letter also provided a simple breakdown of how the federal government calculated my small time stimulus payment.

But what was the point of sending this predecessor letter out to let me know this? Why is the IRS and federal government so oblivious and wasteful when it comes to wasting millions of dollars on paper and delivery costs to send out these pointless letters? Why not just combine the calculation breakdown letter with the actual stimulus rebate check that I received yesterday rather than sending them separately on different weeks? The financial savings for the federal government could easily have been several million dollars. Especially since we are now in an economic recession and the government keeps griping and raising issues about needing to balance the budget, and even some of the presidential candidates like Barack Obama keeps talking about raising taxes against those with higher incomes to pay for more federal government programs, why not practice some fiscal sense now by adopting real cost cutting techniques? The government’s habitual wasteful spending activities truly baffles me sometimes.

How My Economic Stimulus Tax Rebate Was Calculated

While I had hoped to receive my economic stimulus rebate via direct deposit, because I filed my 2007 tax return through TurboTax and actually owed a sizable amount of taxes, I was not able to provide my bank account routing numbers on my tax return for direct deposit purposes. Thus I was one of many who had to wait for my economic stimulus check to be mailed via the postal service.

Taking a look at my rebate, here is how my actual stimulus payment was broken down, in case you’re wondering. Because my adjusted gross income on my reported 2007 federal income tax return was above $75,000, the IRS reduced my stimulus payment by 5% of the amount of my adjusted gross income exceeding $75,000. As such, with my single filing status starting qualification amount of $600 increased by $0 for my lack of qualifying children, but reduced by $230.25 for the adjusted gross income limitation, my final calculated stimulus payment turned out to be only $369.75. It’s not a whole lot, especially since the cost of living in my D.C./Maryland suburban neighborhood is pretty high, but I suppose every little bit helps me pay the bills in the grand scheme of things.

How I Plan To Spend My Economic Stimulus Check, and Its Impact On My Future 2008 Tax Return

I’m obviously elated to receive my tax rebate check finally after all these months, but after looking at the relatively small amount, it sort of leaves me wondering, how is this small amount of money really supposed to stimulate the economy to any significant degree? While the check is certainly free windfall money in the sense that I wasn’t really expecting it or planning for it until recently, the amount isn’t really large enough for it to be good for much.

I considered several financially smart as well as a few fun but reckless ways to spend my tax rebate, now that I have it in my hand. Here are the choices and possible options I came up with:

1. Use the economic stimulus payment to help pay my rent – The downside is that with a pricey monthly rental obligation of $1,425.00, this small economic stimulus payment isn’t likely to make much of a dent in my case.
2. Deposit the small stimulus rebate into my high APY savings account to earn interest and help build up my backup emergency fund – I usually try to keep at least enough liquid cash in my savings account to last 6 months. I advocate more emergency fund savings than most, but I think this offers greater peace of mind. In this recession, you never know what unfortunate events may strike when you least expect it – everything from out of the blue vehicle repair charges to sudden unemployment necessitating the need to file for unemployment insurance benefits.
3. Save the stimulus rebate for retirement and contribute the amount towards my Roth IRA retirement fund. This is a good way to plan for the future. Great for you, but not so good for the economy (at least for the present time).
4. Pay off debt – While this sounds like a logical choice, other than my usual monthly revolving credit cards bills that I always pay off in full, my 0% APR balance transfer credit card arbitrage funds, and my very low interest student loans, I don’t have significant debt that demands my immediate attention to speak of. I think I’ve done a pretty good job of managing debt.
5. Spend the money and actually help directly stimulate the economy by injecting it back into the stream of commerce – Possibilities include using it for discretionary entertainment reasons like spending it on expensive movie tickets or even just using the amount to pay for necessary driving expenses brought about by spiraling high gas prices.

After much thought, I decided to deposit the amount into my high yield savings account like a good grasshopper (or was it the ant) and save for a rainy day. Why change my frugal savings minded personality just because I came upon some windfall money? I’m the type of person who would probably still drive around in a rain storm for a free car wash to save some money as a force of habit even after winning a lottery for millions.

As for the taxation aspects of the economic stimulus payment, due to the terms and nature of the Economic Stimulus Package, recipients of the tax rebate such as myself will not have to report the amount of our stimulus payments as taxable income on our 2008 federal income tax returns. The amount is indeed free money and not something we will have to pay back or pay taxes on. Furthermore, if any recipient also received any other federal benefits or federally financed benefits, those benefits generally will not be affected by any stimulus payment received as well.

Where’s My Economic Stimulus Payment? Ask The Almighty IRS

For those of you who are still waiting for your stimulus tax rebates with bated breath, you should utilize this handy IRS stimulus rebate tool to locate the status of your economic stimulus payment. It should be able to answer your most pressing tax rebate question. To use the online tool and verify your identity, you’ll need to provide your social security number, your filing status, and the total number of your exemptions.

If you still are not able to obtain a satisfactory answer, you may want to visit your local Taxpayer Assistance Center for help or call the IRS via the Rebate Hotline at 1-866-234-2942 for updates.