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Personal Finance Courses: Predatory Lending

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1.
You can get a short-term loan from your checking account through what is called _______.
Choose wisely. There is only one correct answer.
Overdraft protection. Overdraft protection simply means overdrawing your checking account. You will likely be charged a fee for it.
2.
The interest rates of payday loans are very high.
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True. Payday loans have average annual interest rates of 500 percent--or more.
3.
Predatory lending can be identified by _______.
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Its high costs. Predatory lending involves a business charging higher-than-normal costs of various kinds.
4.
If you take out $1000 from a payday lender, a credit card, and a credit card cash advance, which will charge the most interest?
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The payday lender. By far, the payday lender will charge the most interest. The dollar amount difference between it and the credit cards will be immense. It should be noted that there are also options that are even lower in interest than the credit cards.
5.
What do borrowers use payday loans for?
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All of the above. People take out payday loans for many different reasons.