Uncovering The Costs by trizmulyati


									                               Uncovering The Costs

How do lenders charge a fee? Anytime you see the words interest rate or service fee, you
can guarantee that your money will be going to the company to pay for their services.
There are various reasons as to why these fees are attached to transactions. The more you
understand the reasons they occur, the better equipped you will be to pay the least

Payday loan lenders use the words service fees. This fee is to pay for the price of getting
an unsecured loan which is usually to the risk of the lender of being repaid. There are no
credit checks and people with poor credit history will be approved as long as they qualify
according to the company's guidelines. The service fee for the loan will be attached to the
payoff amount which is usually expected to be paid off within two weeks of obtaining the
loan. If the amount is not paid in full, there are ways to extend your loan, but interest
rates will be applied to the amount owed. You can buy down on your loan by paying the
interest and an amount towards your principle and interest will accrue towards the
remaining balance until paid completely. There is also the option to extend or "roll over"
your balance to another pay period. The interest will subject your full amount until you
pay down or pay off your loan. Keeping your balance open for too long will create
expensive additional charges to your account.

The law requires lenders to disclose their interest rates and provide a copy of borrower's
rights. It is up to the borrower to ask for clarity if there is any confusion. A good lender
will have a qualified customer service representative team available to answer your

Banks have various interest rates set up on their different loans. Short-term loans will
carry higher rates than long-term loans. The banks have many "other" charges which
brings in revenue. There is the well-known overdraft fee which now averages $34 per
transaction and is bringing in millions of dollars of revenue to banks. Many overdraft fees
are paid right away and the problem is solved while some people turn to payday loans to
pay a smaller fee and get the problem solved in just a short period of time. Bounced
checks will address this charge plus an additional one from another bank if there was a
transaction attempt processed there. The average shortfall fee for a debit card transaction
is $17. There are holding deposits from some merchants which can be held on for longer
than necessary which can increase the number of overdraft fees even if there were
sufficient funds deposited. A hold on an account will keep a set amount from being used
until it is lifted. There is also a problem with some banks that subtract transactions
according to the transaction amount, largest to smallest, rather than the date and time of
the transaction.

These practices can set your account up for unnecessary charges. Wells Fargo Bank has
stepped into payday lending, direct deposit advance, but they do not disclose their service
fee of 10% on these direct deposits. If banks and credit unions were to disclose all of their
charges there would be a new outlook on their business as well.

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