Payday loans online are getting a bad rap, based on a recent study I read, as well as some research I did into fee's a bank may charge for an account being in overdraft status.

A recent survey performed by a payday association President paydayloanindustry.com claims that payday loans are significantly less expensive than if someone were to overdraw a common checking account for the same (comparable) amount of money.

I read the report and concluded that this may be very true.

This surprising comparison revealed that a $39 per-day, bank overdraft fee was over 1,000 times more expensive than paying interest of $45 per week on a payday loan at 784% APR !

Let me put this another way:

This is going to shock you!

A 784% APR- payday loan for $300, is roughly 4.3 times cheaper than a $300 bank overdraft at your friendly neighborhood bank for the same week time-period, and 1,000% cheaper on a $5 bank overdraft !

I tried to contact Joel Morgan, loan representative at (hUgeS bank name here).com and was declined his comments on this. I asked him to do the math and he agreed that, in the case of a $300 overdraft, his bank may charge the published account holders standard overdraft fee. I looked it up online and here's the condensed version of what it says:".....(Huge Bank name here) bank may charge, and in some cases choose to waive, bank fee's of $39 per day, per dishonored transaction regardless of the total dollar amount of each individual transaction..."

The video above may be useful information, if you are not overdrawn in your checking account. But... if you are, and have only to rely on a payday lender to fix this short-term problem....

I cannot, in good conscience advocate taking out a payday loan at high interest in order to buy something unnecessary,on impulse, or to invest in something that yields less than 784% APR -You get the picture- But my point is that banks are routinely charging more in NSF fee's than most States payday lenders are legally able to charge.

Many States recently regulated payday lenders even more, thus further reducing fee's payday lenders may charge a consumer. In my opinion, this further solidifies payday loans as a more beneficial transaction than paying NSF fee's so your bank can cover a small, overlooked check which you wrote.

With the economy effecting banks ability, or willingness to make small consumer loans, I predict that payday lenders will morph into that vacancy Even more than they have in the past and offer lower-priced higher limit, lower credit standard loans to consumers.I see it as a matter of supply and demand.

Payday lenders are more sophisticated in collecting risky, small-ticket loans and that practice will likely prepare them to replace banks in loans under $2,500 in the next year.

Payday lenders versus high interest credit cards, with accompanying late/over-limit fee's and annual fee charges.

Another aspect of lending is the high interest credit card. Lets do a simple comparison:

• A credit card with a $500 limit at 24.99% APR

• An over limit fee of $29 per transaction at three over limit transactions per year.
• An annual fee of $45

The APR on this credit card is as follows:

$24.99 per $100, per year

$29 per $500, per transaction incidence, of over limit fee x 3

$45 regardless of balance

Amount of annual fee's this scenario = $256.95

APR this scenario = 51.39% before you pay back any principle.

• Payday loan for $500 to pay off this credit card
• 1 Months interest $180
• Fee's if paid in a month $0
• Annual fee $0

The APR on this payday loan scenario is around 460% APR yet the cost of paying off this credit card is less than the annual costs of keeping this credit card with a balance and three annual over limit fee's. This surprised me.

I realize, I am not able to use a more accurate, apples-to-apples comparison.

That would be difficult to do, but I did want to make a simple, mathematical case for you to gain a little deeper insight into the hype surrounding payday loans being unilaterally bad for society.

Your bank has packaged payday loans up in a prettier wrapper and called them affectionately: Member transaction services

My advice is to be money wise, and live below your means. Overdrawing your checking account, isn't a good invest strategy either.

But, in the real World: (Who hasn't done it even once ;)

Don't be tricked into jumping on the media-hyped band-wagons about how consumers need to be protected from Payday lenders until you do a little research.

It kind of begs the question: Is it ever a good idea to protect consumers from themselves?

Some say yes, and have passed laws to mandate that -You do not know what is good for you and therefore are unable to decide for yourself.

Here's a couple examples:

• Seat Belt laws (excluding minors)
• Speedlimit laws
• Payday loan interest cap laws, but no cap on bank NSF fee's

Final tips:

Of course, the key for us all is to take personal responsibility for our life, our spending and our ability to understand the mathematical arguments when someone is trying to take away our ability to choose.

Make wise decisions for you and your family based on the best information available.

Be safe this New Year and remember to buckle up and drive within safe limits, and those imposed upon you :) and if you need a quick way to fix your checking account 'booboo' , consider all of your options before legislation makes those options dwindle even more.

Jean ne' can be reached at grrlpower10@gmail.com