One of the questions we often get from our readers is whether you can get a payday loan with Direct Express card. In other words, can you get a cash advance against your federal benefits payments, like Social Security or Disability benefits (SSI or SSDI)?
The answer is Yes! In this post, we will walk you through what a payday loan is and the costs associated with getting a payday loan.
Second, we will explain how payday loans work and how you can apply for one against your Social Security or disability benefits that you get on a Direct Express card.
Third, we will answer whether the loan proceeds can be paid straight to your Direct Express card if you don’t have a bank account?
Finally, we will provide alternatives to payday loans you should consider.
This post will cover:
- Getting a payday loan with Direct Express card
- People on Social Security and Disability Use Payday Loans
- How to Apply for a payday loan with Direct Express card
- What is a Payday Loan?
- The High Cost of Pay Day Loans
- How Payday Loans Work in Practice
- Alternatives to Payday Loans
Getting a payday loan with Direct Express card
If you are currently getting your Social Security benefits or disability benefits (SSI or SSDI) on your Direct Express card and need a payday loan, keep reading.
If you collect benefits from the Social Security Administration (SSA) and can verify your payments, you’re typically eligible for a payday loan.
This includes beneficiaries who receive their payments through the Direct Expres debit card.
Furthermore, many payday lenders welcome Social Security beneficiaries because, unlike part-time workers, their payments are stable and reliable.
Payday loans are attractive to Social Security beneficiaries because the loans are fast and easy to get.
People on Social Security and Disability Use Payday Loans
According to the Center for Retirement Research at Boston College, nearly 6 percent of households under 66 and Social Security and disability use payday loans, compared with 4 percent of the general population.
Since the average Social Security and disability benefits check is very low, beneficiaries try to supplement their income.
They tend to rely on food stamps, Medicaid, some work, or housing assistance from the government or a family member.
In addition, some use payday loans to raise quick cash.
Despite the very low incomes of the beneficiaries, they are attractive customers for payday lenders.
The reason is that the benefit checks provide extra assurance the loans will be repaid.
How to Apply for a payday loan with Direct Express card
Depending on the lender, you can apply for a loan either online or in person.
To apply for a loan you must usually submit the following information:
- Phone Number
- Social Security Number
- Date of Birth
- Employment Details
- Proof of Income
If your only source of income is your government benefits, then you’ll simply need to report your Social Security or Disability benefits as your source of income.
You may need to fax a copy of your award letter during the application process, depending on the regulations of your state of residence.
Will the Loan go straight to my Direct Express Card?
If you are having difficulty locating the routing number for Direct Express, or the account number for your payday loan deposit, here’s why you can’t find it:
Unlike other prepaid debit cards, Direct Express does not display the routing number and account number for cardholders to see.
In other words, Direct Express doesn’t make routing or account numbers publicly available for their cards.
That’s because only federal deposit payments can be put on the Direct Express card and refunds from purchases you have made.
Therefore, unfortunately, your payday loan proceeds cannot be deposited onto your Direct Express debit card.
You will have to provide another bank account or prepaid card for the loan proceeds.
You should consider the American Express Bluebird card, which comes with no monthly fee.
What is a Payday Loan?
A payday loan is typically a short-term loan of less than $500 typically marketed or targeted at low-income individuals.
The borrower writes a check for the amount of the loan, plus fees, to the lender dated for their next payday.
The lender then cashes the check on the borrower’s payday and collects their principal and fees.
The High Cost of Pay Day Loans
Today, the business of making very high-interest rate loans s dominated by payday loans.
That’s because payday loans are short term loans supposedly designed to last only until the borrower gets their next paycheck and repays the money.
Payday loans come with very high fees.
According to the Consumer Financial Protection Bureau (CFPB), the payday loan fees might range from $10 to $30 for every $100 borrowed.
In addition, the maximum amount you can borrow and fees vary by state and are largely based on state law.
A fee of $15 per $100 is common. This equates to an annual percentage rate of almost 400% for a two-week loan.
So, for example, if you need to borrow $300 before your next government benefits payment date, it would cost you $345 to pay it back, assuming a fee of $15 per $100.
How Payday Loans Work in Practice
Payday loans are marketed as short-term loans, with the borrower expected to repay the loan when they receive their paycheck.
However, that is not how it works most of the time.
Instead of the borrower paying back the loan in full, consumers find themselves scrambling to manage the loan repayment and other bills.
Three-fourths of all payday loans are taken out by borrowers who have taken out 11 or more loans in a year.
Furthermore, most of them are taken out within two weeks of repaying a previous one.
This then becomes a cycle. What started as a $200 short-term loan can balloon into over $1,000 or more for the borrower to pay back.
Alternatives to Payday Loans
Because of their high cost, if you can avoid getting a payday loan, you should.
Here are some other alternatives to consider:
First, you should call your current creditors and negotiate for more time or a lower payment.
It’s always best to get ahead of a payment problem with a creditor, particularly a utility or mortgage lender.
However, do not wait until you get shutoff or eviction notices.
Second, you can ask friends or family for a loan. Borrowing money from people close to you can be difficult and even embarrassing.
However, if you’re in a difficult situation, it might not hurt to ask.
Also, when you borrow money from friends and family, be realistic about how long it will take to pay back the money.
Finally, to get ahead of future situations where you find yourself facing financial difficulties, you should try and start an emergency fund.
This is probably best to do with a credit union as they will often let you start small and add a few dollars weekly to a savings account.
You will however be required to join the credit union.
To find a credit union near you, click here.
Payday Loan with Direct Express Card Summary
Here’s the bottom line:
Some Social Security and Disability beneficiaries often use payday loans to raise quick cash.
A payday loan is a short-term loan of less than $500 typically used by low-income individuals.
Depending on the lender, you can apply for a payday loan either online or in person.
If your only source of income is your government benefits, you will need to report your Social Security or Disability benefits as your source of income.
Payday loans come with expensive fees.
On average, you will pay a fee of $15 per $100 loan. This equates to an annual percentage rate of almost 400% for a two-week loan.
There are alternatives to payday loans, including negotiating with a creditor for more time or a lower payment.
Also, you can borrow from friends and family.
We hope you found value in this post on payday loan with Direct Express card.
If you still have questions, you should leave a comment below.
However, what may be an even greater help is to join our FREE Facebook members group about Making Sense of Social Security Benefits.
It’s a very active group with some really smart people who love to answer any questions you may have about Social Security Benefits.
Also, from time to time, our team of editors drop in to contribute and answer questions.
Finally, you may like these popular articles, including:
Direct Express Emergency Cash: Get Cash Advance without Card
My Social Security Account Login
How to Change Your Address with Social Security
Top 5 Changes to Social Security in 2021
2021 Social Security Payment Deposit Dates.