Paycheck advance loans?

Hey. Here’s my idea. The hardest thing on the GED for everyone seems to be math. Everyone’s always sayin’, when do you ever do math problems? In real life, you know? Well, every time you take money outta your pocket, you doin’ a math problem. I’m tellin’ you, smart money is math. So, I’m gonna focus on ways that math comes up everyday. You can get smarter in math for the GED and in your life, too.

Here’s something. This guy I know, Tony, he was strapped for cash. Had to make a car payment, and didn’t want his car repo-d. Yeah, we all been there. Best advice I give him is don’t spend all your dough and get into that situation. But, too late for that. You know how it is, everyone’s hard up.

He was gonna go to one of those payday advance loan places, and I said that’s no good. So let’s look at this. Here’s what they were offering:

Tony wanted a loan of$200. So they wanted him to write a check for $230, dated 2 weeks in advance. He can pay back the $230 or they’ll deposit his check. It’s only thirty bucks, Tony said. (Yeah, that’s why he’s broke.) But what kind of yearly interest are they charging?

The loan is for 2 weeks. There’s 52 weeks in a year. So the yearly interest rate is 26 times the percent interest he’s paying. (Get it? There’s 26 x 2 weeks in a year.)

Compare that to 20% yearly interest on a credit card.

Let me know how you figured out this comparison, and I’ll write later to tell you what I showed my friend.