They are new trend in predatory lending practices but still manage to fly under radar of regulation in most states. They don' t charge interest, they charge a "fee".

But it sounds like ultimate in convenience. Need some quick cash - stop by and in just five minutes you can be out door with $100, $500 even $1000 dollars. But what is true cost of this "convenience"?

How It Works

A cash advance or payday/paycheck loan is usually secured by a personal check. Some companies want your bank account or credit card information in addition to or instead of a check.

You write a check to be cashed or agree to have an amount withdrawn from your bank account sometime in future; usually 14 days (the standard payroll period).

After completing agreement/contract you are given an amount that is less than what you have agreed to pay. The difference is "fee" for loan service. And you have got your cash!

Why It Works

Why is company willing to loan you money like this? Simple, because loaning out money for these "fees" really amounts to a huge profit at your expense.

For example, say you borrow $200 and lender charges a "fee" $15 for each $100. Within 14 days you will have to pay $230 for borrowing $200. Now if $200 keeps you from having to pay a $100 late fee or penalty on something it is probably worth it. But if you just want money today, you are paying a high price.

"0% interest* for first six months, no annual fees** and a low fixed*** rate of only 8.9%****!"

* Unless you count deferred interest we will charge you if you don't pay off full balance transfer amount when promotional period ends.

** Except ones we charge for "late payments****", going over your balance, cash advances, balance transfers, membership in "rewards" programs, etc., etc., etc.

*** Fixed for first month, but after we may change it without notice for: late payments, going over your balance, changes in prime rate, or just cause we want more of your money.

**** Rate depends on your credit score. (Which we already checked and intend to charge you 19.8% or we wouldn't bother sending you this great***** offer.)

***** A payment may be late if we just don't get around to processing it in time no matter when you actually mailed it to us.

****** May not be great in all states.

Yes, folks, "the devil is in details" and truth is in fine print.

While this is obviously an exaggerated and fictitious example I have seen most of these "weasel" clauses in 100s of credit card offers I receive each year.

Some of these tricks and traps are practiced by local and national merchants with their "store credit cards" and "discount cards".

I have seen stores and even car dealerships make "no interest for a year" type announcements and advertisements. But when you actually read contract (and who does that - they count on you to not read whole thing and you probably won't understand it without your attorney) you may find that instead of regular payments you would expect to start at end of no interest period, you are required to pay full purchase price.

If you want to make installment payments, you will be required to pay payment plus interest (look for rate in fine print) and you may also be required to pay interest that accrued during your "interest free" period. Gotcha!

Or how about "no annual fees" bit. Look out for contract to say "no annual fees FOR THE FIRST YEAR". Or first two years or that a "membership" fee is required. How that differs from an "annual fee" is beyond me.

Also watch out for "no annual fees" for use of card but "membership fee required" to participate in frequent flyer miles or cash back points program (which was probably why you chose that card to begin with). Gotcha!

And how about "fixed" rate? Read fine print, it will actually say "subject to change without notice". Is it just me or do I misunderstand meaning of word "fixed"?