Payday loans are a dignified and cost-efficient “financial taxi” to get from one payday to another when you are faced with a small, short-term cash need. However, a payday advance is not the right choice in every situation.  

A few tips from the FTC (with Payday Pundit commentary):

• Find out the terms before you decide. In any case, shop first and compare all available offers.  (Yes!!!  For those considering a payday loan, www.knowyourfee.org lists payday loan fees by state.  Members of CFSA are also required to display their fees and APR in large type on posters in their stores.) 
•  Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR.  (Keep in mind that alternatives such as late fees or overdraft protection are not disclosed as APRs). 
• Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. (Worksheets and tips are available to help create a budget).

The alternatives listed by the FTC include:

1. Small loan from a credit union or a small loan company
2. Credit card cash advance (Be sure to add the higher interest rate, transaction fee, cash advance service charge, etc.)
3. Contact creditors. (Watch for late charges, finance charges or higher interest rates. For credit cards, the average late fee is $37).
4. Contact consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget.   (Payday loans should be used for short-term financial needs only, not as a long-term financial solution).
5. Overdraft protection.  (The average overdraft protection fee is $29).

Considering the fee for a payday loan is typically $15-$17 per $100 (with no hidden fees or additional interest), it becomes clear why reasonable people look at the alternatives and choose payday loans.