In recent years, several celebrities have lent their names and likenesses to services that offer consumers payday loans, a costly type of financing that can be perilous if not handled correctly, and the latest to do so is the “Octomom.”
Nadya Suleman, who in 2009 famously gave birth to octuplets as a result of in vitro fertilization, recently helped a lender launch an initiative known as “OctoLoan,” according to a report from The Hollywood Gossip. This new payday loan service will extend borrowers up to $1,000 instantly, and with no credit check. Suleman, who is better known as the “Octomom,” has 14 children and is frequently in the news.
In theory, payday loans may be beneficial for some consumers who have low incomes and little savings, but who run into financial difficulties that require immediate quick fixes. But the problem with most of these lenders is that they charge high interest rates which make them difficult to pay back and can imperil borrowers both financially and through their credit rating, the report said. The service being pushed by Suleman is no different, as it charges borrowers as much as 600 percent interest. Further, it was reported that she shot a commercial for the service, which paid her more than $10,000 for her endorsement.
Other celebrities, such as Montel Williams, also endorse payday loans, and still more have been behind promotions for prepaid debit cards which carried a number of high rates and fees not typically found in more competitive accounts. Perhaps most infamously, the Kardashian sisters tried to promote their own prepaid card in 2010, and that account would have charged users more than $100 per year in fees for normal use. It was axed before even being released.
[Free Resource: Check your credit score and report card for free with Credit.com]
Whenever consumers seek new lines of credit, they should always be careful to evaluate the ways in which doing so will affect their financial and credit standings. For instance, payday loan payments can be easy to fall behind on because of the high costs involved, which can significantly lower a borrower’s credit score and also put them in dire financial straits going forward as they attempt to remediate their missteps.
Image: rinkjustice, via Flickr