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Lawmakers all over the country have begun to crack down on the business of quick cash loans. They are pricey, they are tough to pay off, the terms are frequently complex, the lenders aren’t particularly sympathetic, and the businesses seem to prey upon those who can least afford trouble – the poor and enlisted military personnel.

Payday loans are short term cash loans offered at a seemingly insane interest rate that averages 474% nationally. The payments are due, completely, in two weeks. If they are not paid in a timely manner, the interest continues to accrue. There are lots of stories of individuals who have borrowed a couple of hundred dollars, repaid several thousand dollars in interest, and were still sued for the unpaid balance. Because of the negative press that these businesses have been receiving, some of them have been trying to hide themselves while doing business under a seemingly unrelated line of work.

Here is an example:

A company doing business at the now defunct Website Acepays.com was providing loans of as much as $1000 disguised as “memberships.” The scheme was that individuals could become “members” of their Website and obtain discounts on merchandise offered for sale by the company. There were seven different memberships offered and each one promised greater discounts than the level below. The highest level, the “diamond” level, offered discounts of as much as 60% on merchandise and included a “cash rebate” of $1000.

Now why would anyone join and pay recurring fees in order to get a cash rebate? The plan worked like this – A person decided to join, had regular payments for the “fee” deducted from his or her bank card, and they then received the $1000 “rebate.” The problem, as the state of Pennsylvania saw it, is that the purpose of the Web site wasn’t to market discounted products; it was to lend money. There were a number of mentions on the Web site of how members could “get the cash you need now.”

The state regarded this as a high-interest loan business, and decided that the  rate of interest offered by the company on their “rebates” was in excess of 600% per year, a somewhat exaggerated amount in light of Pennsylvania’s legal limit of 6%. The Website is no longer online and the company has promised refunds to some of the customers who were overcharged.

Many of these companies are still in business, and consumers should watch out for sales pitches that seem too great to be true. Joining a “membership” program for several thousand dollars in order to receive a $1000 “rebate” isn’t a good deal; it is a complete rip-off. Consumers should watch out, for there will be a lot of more companies like this doing business on the Internet soon.

U.S. citizens have more debt than in the past. A recent study shows that people in the United States, as a whole, are saving cash at  the lowest rate than at any time since the 1930’s. In reality, the savings rate is literally negative, and that means that individuals are spending more money than they are earning. The problem with doing so is that the bills eventually catch up to you. You can either pay your bills or watch helplessly as the negative entries begin to pile up on your credit history.

Realizing that a lot of people in the United States have found themselves buried under a pile of debt, and worse, having a credit rating that accurately reflects that problem, quite a few resourceful and dishonest companies have started companies that promise to “repair bad credit.” Their commercials are on television, telephone poles and even in our inboxes in the form of spam. The promises are generally the same; the companies offer, for a fee, to eliminate judgments, bankruptcies, tax liens, late payments and any other “black marks” on a consumer’s credit score, all for a price.

There is just one problem – they cannot do it. There just isn’t any way to lawfully remove accurate information from a credit report. These corporations are promising the sun and the moon, collecting their service fees and doing absolutely nothing. As a result of thousands of complaints, the Federal Trade Commission has been cracking down on these credit repair companies, but the twenty or so firms that the agency has shut down so far only scratches the surface. Hundreds of these companies remain in business, and consumers should be aware of these companies that promise more than they can deliver.

While there are genuine credit counseling agencies that can help you with debt problems, consumers should avoid corporations that promise to “fix” a bad credit profile by recommending any of here:

That you challenge every single item on your credit history. This just clogs up the system, but sooner or later, the information will be verified.

That you can get a new “credit identity” by obtaining an Employer Identification Number. This does not work; the credit bureaus will ultimately determine that the two identities are identical.

Urging you not to pay your debts because of an alleged Federal law that makes offering credit against the law..

The only way to “fix” bad credit is to pay your bills, pay them promptly, and wait. It takes years to get into credit trouble and it takes years to get out of credit difficulty. There is no rapid fix, no matter who promises you otherwise. Instead of paying someone to “repair” your credit, save the money and use it to pay down your debt.

The commercials on television and radio seem ubiquitous, suggesting that if you owe too much cash, all you need to do is use debt consolidation to end your debt problems. Getting out of financial difficulty is more involved than just taking out a loan, as you actually have to repay your debt to get out of trouble. The right debt consolidation loan can make it easier to repay bills, as you will have to make only one monthly payment, but the wrong loan can cost you more cash.

Debt consolidation is the expression for replacing a number of pricey, high-interest loans with a new one at an cost-effective rate. By reducing the rate of interest in addition to the number of loans, the consumer has the chance to repay debt faster than before.

There are two ways to borrow cash to consolidate your debt; each has its great and bad points. An unsecured loan can be used to pay back debt and a secured loan, which requires collateral, can also be used.

A secured loan is probably the most commonly employed tool to consolidate debt, making use of collateral that offers somewhat of a guarantee to the financial institution that you will repay. In exchange for offering collateral, you do receive some positives – you can probably borrow more cash than you could with an unsecured loan, and the rate of interest that you pay will almost certainly be more affordable. The most typically used forms of security are homes and vehicles; it is easy to develop a value for them and they can sell easily should you default on your payments.

An unsecured loan needs no collateral; the loan company just lends you the money in exchange for a promise to pay back. An unsecured loan can be harder to get than a secured one, especially if your history of credit is poor. An advantage for the consumer could be that there is no inherent risk of losing assets, such as a house, should he neglect to repay. Unsecured financing comes with a cost, as the interest rates have a tendency to be quite a bit higher than for collateral-backed loans.

The offer of collateral to the financial institution goes a long way towards obtaining a sensible rate. Consumers can get the ideal deal by acquiring secured loans. For the large majority of consumers, secured financing offers the ideal monetary leverage towards repaying off a stack of bills. As the rates are steeper, trying to consolidate debt with more unsecured debt may leave the borrower just treading water. If you’re in doubt as to what might work ideal for you, consult with a lender.