Payday Loan vs. Bounced Check Fees

Payday loans are actually more economic than the overdraft fees you receive from your own bank and the overdraft fees, (around $25 to 30.00 in most states) that are also collected from the party who received your bounced check which can reach up to $35 alone. Some banks are even offering brochures that practically encourage you to bounce a check where they can collect these fees as profit.

This is not a good break for you as a consumer. These overdraft protection fees can add up very quickly and before you know it your bank is making an extra $100 a month just off your checking account.
One of the largest sources of profit for banks are these new overdraft protection plans. Washington Mutual, the nation's seventh-largest financial institution and the largest to promote overdraft protection, charged customers more than an estimated $1 billion in overdraft fees last year according to the New York Times.

They charge fees instead of interest but if you calculate what the interest rate would be IF it were an interest rate charge instead of a fee, you would see the interest rate amount could be as high as 1000%

Also, unlike a line of revolving credit, which allow you to repay the loan at YOUR convenience, these overdraft protection plans require you to bring your account back into positive balance in just a few short days. Most traditional lines of credit have limits of thousands of dollars, whereas the new overdraft plans have limits of $100 to $300 to $500. If you have expended your overdraft limit protection, the bank goes right back to bouncing your check and charging the bounced rate check fee.

A payday loan not only gives you more time for paying back your debt, the fees are not nearly as expensive to you as the consumer.