Are Debit Card Payday Loans Safe?

By Shawn Lee Martin


debit card payday loansA new question has come up lately from our customers that asks: “Are debit card payday loans safe?”

This question kind of took us by surprise not because we have never heard it before but because we have heard it quite a bit in the past but not for some time.

Payday loan companies used to use these but in the last several years they have been advertising no debit card payday loans because the selling point of not needing a debit card was huge.

Now all of a sudden they are going back to the practice of using them again and we went looking to find out why.

We did a bit of research and found some interesting facts on why this is happening.

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Why Use Debit Cards?


We found out several reasons for payday loan companies wanting to go back to using debit cards to conduct payday loan business.

The obvious reason is to be able to hit your debit card for payments and also grant new loans they can directly deposit on these cards, thus making it easy to get repeat loans and keep customers coming back.

A good business practice for the loan companies but not so good for the borrowers, as the debt load can get out of hand incredibly fast with such easy access to multiple loans.

If you should get behind these companies will continuously hit your account in hopes of getting any amount you may have in the account, and they never give up.

Remember, you must give them all of your account information to use this method, and that is giving these companies control over your bank account.

Not a wise choice in our opinion.

Another Darker Reason


Many states are making online payday loans illegal and collection attempts by the loan companies are being denied by the banks, thus making it impossible for them to collect on the customer’s debt, or is it?

Minnesota, New York, and several other states now have the cooperation of credit unions and many banks in not honoring any payday loan transaction requests by the payday loan companies but, of course, they found a way around this.

They are now contacting existing borrowers and asking them to transfer all their transactions to the debit cards as a way of getting around the law, and it is working.

The problem is they are not informing the customers as to why they want them to do this.

By getting the customer to make this change, it allows the loan companies to continue doing business even in states that have made them illegal, and they do exactly that, continue to conduct5 business as usual.

They have been known to not give up on getting the borrowers to switch their loans over to debit cards, and in one instance made 36 calls in one 24 hour period to one customer, even threatening her with legal action if she did not comply.
Here is a good video addressing payday loan practices that are not on the up and up.


The efforts to get the banks to cooperate and deny access to customers accounts by the payday loan companies is working, and thus we have these collectors hounding customers to switch to debit cards, which the banks can not easily track.

See a complete list of states that have made payday loans illegal here: Wikipedia-Payday Loans 

NOTE: Make sure your payday loan company is legally allowed to do business in your state.

Summary


In our opinion using debit cards for payday loans should be avoided and taking it a bit further if online payday loans are now illegal in your state, make sure to check the existing laws as you may be off the hook completely for your payday loan balance over the original amount borrowed.

In other words, you may only owe the principle borrowed or possibly even nothing at all.

I hope this information helps you in understanding some of the negative and illegal practices of payday loan companies and it is our hope that you avoid them in the future.

If you are currently experiencing out of control payday loan debt please give us a call toll-free at 1.877.280.5100 or fill out our form for YOUR free no-obligation quote on how we can help you.

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24 thoughts on “Are Debit Card Payday Loans Safe?”

  1. Hi Shawn,
    Sounds like you really have to know what you’re getting into with these payday loans.
    If the high interest charged wasn’t already bad enough they are now getting you to use your debit cards as another way to sting you!?
    Thanks for bringing some of these questionable practices to my attention.
    – Luke

    1. Hi, Luke!

      Yes, they will get you any way they can, because to them all you represent is $$ signs, and that is sad.

      Everyone has options and we give people with payday loan debt the best option for getting rid of that debt, and I want everyone who has out of control payday loan debt that we are here to help them!

      Thanks for stopping by and help spread the word we care here!!

      Shawn>>

  2. I can not believe how they can harass someone. I would tell them I am taping the call as soon as they called lol. Then you can take legal recourse and sue them for harassment. It is bad how people treat and take advantage of others. I think your article is very helpful as a review. I think I will just stick with the banks. If they say no then maybe I should just not borrow money and try not to spend so much. I am proud someone wants to help people not get caught up in that.

    1. Hi, Tammy!

      The problem with the online companies is they are situated outside the USA and are really untouchable by the average borrower.

      I think you are very wise to stick to your regul;ar banks, they are much more reliable!

      Shawn>>

  3. lots of content .. very well presented and professional .. the site if very believable and call to action on every page.. thumbs up for a job well done. I like you use of videos to get your point across.. Dont know how i can help you because you seen to have it all down

    1. Hi, Morna!

      Thanks for stopping by and checking us out!

      We have been adding videos lately because they work well with mobile users and more and more traffic now days is from mobile.

      Shawn>>

  4. Hi Shawn, great site with alot of good information! I haven’t used payday loans in a while but it is interesting to see the trends they follow. I wasn’t aware of the debit card loans and such. The shady companies will always find a way around the law won’t they? Thanks for the heads up on everything, it may come in handy in the future.

  5. it is very tricky whether one should take these sorts of loans out as i believe these companies prey on the weak to take out these loans. your website is layed out really great and is very user friendly, and its clear that you have a lot of personal experience in this field so well done

    1. Hi!

      The loans themselves are harmless if you understand them and are willing to pay that high interest for the short term loan. That is the key, short term!

      Pay it in full on the first due date and it will be done and over with. Extend it once and you start a whole new process that usually ends badly.

      Thanks for stopping by and if you ever need help we will be here!

      Shawn>>

  6. Shawn I am from Kenya is it possible to access the loans? Are other countries eligible for such loans. I can gonna for one if my country is among the crack of the one listed. They have surprised me from your content. If were in the states I will have gone for one.

    1. Hi, Divican!

      I am not sure if they offer these loans there or not, but if they do be careful and follow my advice on how to use them.

      You can find information on how to safely use a payday loan here:

      How To Use Payday Loans

      Thanks for stopping by!

      Shawn>>

  7. Hi Shawn,

    Thank you for this insightful post – it is incredible what these companies will do to keep operating. Luckily (and touch wood), I have never been in this situation where I have had to resort to such drastic measures to obtain some short term loan. However, I feel sorry for those that do and even worse that there are these sharks out there preying on people who are vulnerable and perhaps not thinking straight. You hear these types of adverts all the time, get £100 transferred in 10 minutes etc so I can see how easy it is for people to fall into these traps. Thanks for the info! At least it is reassuring to know that in a lot of places the law is on these victims side if they report such companies!

    1. Hi, Holly and thanks for stopping by!

      I am so glad you have not had to venture into business with these companies, and it is a shame they are there taking advantage of people. Some of the companies are actually on the up and up and do look out for the customer as much as they can, but even these companies have horrible interest rates.

      It would be nice if the banking industry created some low interest short term installment loans for people who need them.

      Shawn>>

  8. These loans really do worry me – I nearly got involved with one about 3 years back ( and I’m so glad I didn’t! ). The fact, as you point out, they are contacting existing borrowers and asking them to transfer all their transactions to the debit cards is shocking really. What are the real restrictions these companies work under and are they properly regulated?

    1. Hi, Chris!

      Some states are real aggressive in trying to regulate these companies and other states are paid off by corrupt officials.

      It is extremely hard to regulate the online companies because many of them are based outside the USA.

      Thanks for stopping by and I am glad you are staying away from them!

      Shawn>>

  9. Oh my gosh this is scary. It never even occurred to me to worry about debit card payday loans. I have used this type of loan in the past but not for a while.
    I am in South Africa and I never thought about what would happen if I get behind on any payments.
    Thankfully I haven’t felt the need to take any loans out for a long time and don’t plan to again. This was very interesting to read, so thanks for sharing.

    1. Hi, Lynne!

      Glad you stopped by and checked us out!

      I am happy that you have not needed to take any of these loans out and I hope you continue to not need them. 🙂

      It is becoming harder and harder to stay out of trouble when taking out these loans, and I am glad you are keeping your distance!

      Shawn>>

  10. Thank you, Shawn, for the insightful and informative article. I see advertisements all the time for quick payday loans. One thing that always bothers me is how they make it seem that this is the answer to all your financial problems. I don’t buy it but I’m sure people many do, otherwise these outfits would all go out of business. You are able to put a definition to it and put it in perspective. Thanks for the great information.
    –Larry

    1. Hi, Larry!

      They really are an answer for someone who has no credit when they need money, but they will pay for it in interest.

      You can sue these companies safely, but you need to be very careful as to not get caught in the Payday loan trap.

      Thanks for stopping by Larry, and if you or anyone you know may beed our help please know we will be here!

      Shawn>>

  11. I did not know that the Pay-Day loan companies could do this. It is unbelievable the amount of interest these institutions are legally charging customers. The people who must obligate themselves to these institutions are not always in the best financial condition to begin with. Is this legal? Are these Pay-Day loan companies allowed to take control of the borrowers bank accounts by disguising them with a Debit card? I sure hope our states find this practice unconstitutional and illegal. The sooner these companies are put out of business, the better.

    My wife did not have any credit when she needed a car. The Pay-Day loan company loaned her the money, but at 26% interest. Wow this is insane, but we did it because she had to have a car. We hope to refinance after one year, once she shows she has made all payments and she finally has credit.

    Thank you for the warning about these unscrupulous companies.

    1. I am glad she got the car and I understand how it is when you have no credit.

      I have been there myself and I do understand. I also know how hard it can be to make the payments and stay on top of finances and yes, these companies can help if you know what you are doing and you follow the rules of How to use payday loans correctly.I wish you guys all the best and if you ever do need help we will be here!

      Shawn>>

  12. This is a great and honest post, thank you for sharing… I, personally, think it’s best to live within your means – if you can’t afford to buy something straight up, in cash, then forgo until you’ve saved up the money to afford it!!
    Obviously there are exceptions, such as houses, where there’s not much possibility for most people to buy one straight out, however I think this is a generally better, stress-free way to live!! 🙂

    1. Hi there!

      That would be the way to do it but for some reason they American Way seems to be borrow borrow borrow.

      I love your stress free way to live attitude, i wish more people had it!

      Thanks so much for stopping by and if you ever do need help or any of your circle we will be here. 🙂

      Shawn>>

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