Can you imagine if someone had access to your bank account and was automatically withdrawing money whenever they chose? Well, if you sign up for a payday loan, the lender may want access to your checking account to do just that. And that's probably one of the quickest ways to get into a payday trap.
Since payday lenders base their decision to qualify a loan on the likelihood that they will be repaid it is in their best interest to have access to your bank account. This way they can easily collect the debt and not worry about your check bouncing. The problem is that once they start collecting, they may not stop. That's when you need payday loan help.
Cover Your Check and Cover Your Behind
One of the biggest mistakes that payday loan borrowers can make is to write a check and then not have sufficient funds in the bank to cover it when it comes time to repay the loan. If that happens, not only will the payday lender be up in arms, but your bank will now charge you a non-sufficient fund (NSF) fee every time the payday lender attempts to collect on the check they hold. Plus returned checks cause a negative credit rating. Talk about needing payday loan consolidation.
To add insult to injury, in most states the payday loan lenders may be able to file a suit under bad check laws. But, wait, there's more.
The second biggest mistake that payday loan borrowers can make is to allow payday lenders to automatically withdraw payments every payday. Sure it's convenient, but just like with checks that aren't backed by sufficient funds, if the payday lender tries to make a withdrawal and you don't have enough funds, you'll still get slapped with a NSF fee. Plus now the payday lender has access to your account to try over and over again. So you're still going to need payday loan help.
Taking the Proper Steps to Protect Your Accounts
If you should get into a difficult situation with a payday lender, contact your bank as soon as possible to discuss your options before you damage your credit and find yourself unable to obtain a checking account.
While you do have the right either under federal law or payday industry rules to stop the lender from electronically taking money from your bank account to pay your debt, that does not absolve you of the responsibility for paying that debt. It merely eliminates further fees for not having sufficient funds and provides some payday loan relief.
Keep in mind that some payday loans have an automatic renewal attached to them. However, under the Electronic Fund Transfer Act (EFTA), you have the right to stop payment on a specific withdrawal as well as the right to revoke your authorization of any future withdrawals.
You must notify your bank at least three business days prior to the withdrawal in order for them to stop it. If you notify them orally, you will need to follow up with a written request within two weeks to make it valid. In addition, you need to notify the payday lender in writing.
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