If you're short of cash, should you get a payday loan? Are they really that helpful?

They can be, if you know how to use them. You can get cash fast with them if you need to, but you need to be careful, because they're expensive. It's a law that payday loan businesses have to post interest rates prominently, so take careful note of the interest rate you're actually paying and make sure you know what you're getting into before you sign the contract.

Here are some things you should know before you decide to take out a payday loan:

Payday loans are expensive. Their annual percentage rates run from 200% to upwards of 800% or even more. Some approach 1000%. That's a lot of money. Even a cash advance off your credit card isn't going to cost you as much, usually. That's not to say that cash advances from credit cards are good, because that's not responsible behavior either. But if you must have money and you're in a pinch, even a credit card advance is better than a payday loan, usually. If you can borrow money from somewhere else, such as your bank, boss, a friend, family member, or any other source, it's likely that you'll get a better deal than you would from a payday lender.

If you decide after considering all your options that you still have to take a payday loan, shop around. You want the lowest annual percentage rate you can find, also known as an APR. One of the best ways to do this is to go online and check out payday lenders there, to see which of them has the best rates. Online competition is usually very intense, so it's likely that you'll get a better rate if you do some careful research here than if you simply walk into your neighborhood payday lender and take out a payday loan right then. The figures you compare should match in terms of their characteristics, for best comparison. For example, let's say a company tells you that you'll need to pay them $10 a week for every hundred dollars you borrow from them. You'll end up paying $521.43 in interest a year on a $100 cash advance with that setup, though. That's a lot more than the "$10 a week" sounds like at first not. In addition, make sure you know what other costs or fees will be charged you besides when you take out your cash advance.

Make sure you know every single penny you are going to pay before you sign. This way, you'll know how much are actually facing in terms of paying back when the time comes. You should also know what's going to happen if you have to roll over your loan, which will happen in the event you can't pay the balance all at once when the loan comes due.