In a payday loan an individual borrows a small amount (usually $100 to $1500) at a high rate of interest.
(For example, $17.50 per $100 for seven days can translates to a rate of more than 900% on an annualized basis.) A payday borrower will typically write a post-dated personal check in the amount she or he wishes to borrow, plus a fee, in exchange for cash.
(For example, if Mike writes a check on the 14th of January, but postdates it for the 28th, the bank will not cash the check for another two weeks.) Article 3, Section 113 of the Uniform Commercial Code (UCC) outlines the rules for postdated checks. The UCC better enables lenders to loan money, secured by a borrower's personal property.) Customers who take out payday loans frequently use postdated checks, which most banks will honor.
A payday loan is a form of short-term borrowing, which many regard as very risky.
Luckily for them, Foster waits to cash postdated checks, but he isn’t legally obligated. Banks and credit unions generally state rules about postdated checks in their account disclosures.
Some of the biggest banks, for example, note specifically that they can honor checks that are made out for future dates.So you date the check a few days in advance — also called postdating it — hoping your paycheck will clear by then. Here’s what you need to know about postdating and what you can do instead.» MORE: How to write a check “It’s kind of a tricky scenario,” says Matt Foster, founder of the rental property search site i Rent and a landlord in Ventura, California.The lender, who initially delivered the cash to the borrower, will cash the borrower’s check on the agreed upon date. Most borrowers, using payday loans, have poor credit and low incomes.They may not have access to credit cards, forcing them to use the services of a local or regional payday loan company.To add further risk, payday loans can be rolled over for additional finance charges.Many know payday loans as cash advance loans, check advance loans, post-dated check loans, deferred deposit check loans, and/or quick cash loans.To avoid any confusion after you're gone, Bradstreet recommends writing a letter to hand-out to trusted family members that include, "where your will is at, who has got it, who is your attorney, safe deposit keys - a lot of people will go ahead and list out their different assets, and their different account numbers." OTHER NEWS: This app may stop robocalls for good Sharing your wishes with family can be tough."Most people, including my wife, doesn't like to talk about it and I don't like to talk about it either mortality, but I want to make sure that my kids are taken care of," said John Noyen of West Chester.If you write a check and don’t have enough money in your account when it’s cashed — whether or not it’s postdated — your bank can cover the payment or let the check bounce based on its overdraft practices.If the check goes through, you’ll pay an overdraft fee.