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Many check-cashing stores also make payday loans-small, high-interest, short-term cash loans. But these small loans can cause big trouble. Here's how:

1. Say that you need $100 and it's a week before payday.
2. You write the check-cashing store a check for $120 and the store agrees not to cash it until your payday. You first have to show proof that you can cover the check such as a pay stub or other paperwork.
3. You get $100 in cash. The store keeps the extra $20 as a loan fee. (Most stores charge between $15 and $30 for a payday loan.)
4. The store cashes your check on the agreed-upon date.

But what if you don't have the money in your checking account on that date? You can extend the loan, but only if you pay another fee and interest charges. This cycle continues as long as you pay the fees. Because most states have no rules limiting the fees these stores can charge, you could wind up paying anywhere from 450% to 650% in fees and interest charges. That's $450 to $650 to get a $100 loan.

If you decide to get a payday loan, check out www.paydayloaninfo.org, a site operated by the Consumer Federation of America.

Tips for getting a payday loan

If you really need cash to pay for an emergency or a major car repair, you may decide that a payday loan is the best option for you. If so, be a smart borrower. Make sure your payday lender is legitimate and that you understand your repayment responsibilities before you sign on the dotted line. Some suggestions:

• Check the legal status of payday lending in your state. Some states prohibit triple-digit interest rates on small loans.
• Shop around for the lowest rates and fees.
• Borrow only as much as you can afford to repay with your next paycheck.
• Know when your payment is due and be sure to repay the loan on time and in full.
• Avoid borrowing from more than one lender at a time.

Once this financial crisis is behind you, plan for the future by creating a budget which can help you avoid the need to pay high fees to borrow the money you need for emergencies and unforeseen expenses.