When calculated on an annual basis, their interest rates are astronomical.
Freeman concedes that payday loans have advantages: the possibility of getting your loan extended, no credit check and avoiding bounced checks or late fees on credit cards. "You have to pay back the loan plus fees, and extending your loan can double or triple your fees," Freeman says.
"If you make a late payment, your interest rate may increase.
This is only a temporary solution because you could easily get into debt again." She insists that home equity loans should only be used for covering costs of large purchases such as roof repairs or an unexpected emergency.
For most consumers this means keeping only 65 percent of the money withdrawn.