First Choice Capital Resources offers merchandise credit lines, installment loans and payday loans through their network of lenders. Depending on the loan option you're after, you can get up to $2,500 with instant online approval. They specifically target consumers with bad credit, who may not qualify for a credit card or even have too much credit card debt already to open a new account.

Update: We have been getting a lot of questions asking for a recommendation for a better alternative. For people with poor or limited credit, we currently recommend the Milestone® Gold MasterCard® which is an actual credit card. Milestone is fairly easy to get approved for and also allows you to see if you're pre-qualified online before you apply.

Another nice thing about the Milestone® MasterCard® credit card is that you can apply even if you have a prior bankruptcy on your record.

Beware: If you're being enticed to apply to get "quick cash with time to pay it back," stop and read this first.

First Choice Capital Resources isn't actually a lender but describes itself as a "free matching service." You provide your state of residence, how much you want to borrow, your bank account type, source of income, estimated credit ranking and monthly income and other information they run this through their network of lenders to match you with someone willing to lend you the money.

The lenders you're matched with may or may not run your credit and your loan repayment terms will vary by lender. Their service is designed for people with all types of credit, good and bad, although the financial products they offer are, for the most part, used by people with bad credit who can't otherwise qualify for a traditional loan or credit card.

First Choice Capital Resources connects you with lenders that offer the following:

  1. Payday loans, which are very short-term loans (usually with a term of two weeks) and designed to cover you until your next paycheck,
  2. Installment loans, which have a longer term and more time to pay back, and Merchandise credit loans, which allow you to buy items online with little or no money down. These credit lines do require a membership fee and they are not a loan.

Why You Should Stay Away

There are almost too many problems with the products offered through First Choice Capital Resources to list. It's true that you will most likely qualify for a loan (requirements are very lenient), but these aren't necessarily loans you want. Here are the problems that should keep you away.

Sky-High Interest Rates

First Choice Capital Resources doesn't advertise any interest rates, fees or other costs because they are not a lender, they only connect you with lenders. However, their website does state: "Your interest rate will vary depending upon which product you select from which lender -- Currently this range is anywhere from 20% up to 1200% APR for payday loans." The average APR for a payday loan is 652%, compared to the average credit card APR of 14.96% (or 23.64% for bad credit).

The argument can be made that these loans aren't nearly as expensive as they seem as they're only for 2 weeks, not one year as the APR would indicate. This doesn't mean this interest rate isn't excessive. Many consumers who turn to payday loans find themselves in a hole, constantly rolling their payday loan into a new loan when they come up short and don't have the money to pay the loan back in full.

For example, if you borrow $100 with a fee of $20 for two weeks and need to roll it over four times, paying the loan back in 10 weeks you would now owe $251. As another example, let's say you borrow $500 for two weeks a a fee of $30 per $100 borrowed. In two weeks, your account will automatically be debited for $650.

Many Lenders Automatically Renew Loans

Did you know many payday lenders will automatically renew your loan by automatically withdrawing the finance charge from your checking account on payday? If you don't have enough money to cover the fee or repayment, both your bank and the lender will impose a hefty insufficient funds fee.

Insufficient Funds? Big Problem

If you don't have enough money in your account when the loan is due and the amount is automatically withdrawn from your account, don't think it stops there. There are hundreds of consumer reports and complaints reporting payday lenders attempting to withdraw the money multiple times a day, every day, for a week or two straight. This means you're hit with fee after fee, both from the lender and your bank. There are even reports of consumers attempting to close their bank account to escape this, only to have their bank refuse to close the account.

Aggressive Collections Practices



Payday lenders are notorious for their aggressive collections practices if you're late to pay the loan. Some even threaten criminal charges against you for writing a bad check, even when your state laws prohibit this type of threat.

Damage to Your Credit

Most payday lenders will claim that they won't run your credit and the loan won't be reported on your credit file, which is true -- unless you can't pay the loan back. Once you default, the loan can be reported as delinquent to all three major credit bureaus, further damaging your credit.

Avoid The Debt Trap

Payday loans, short-term installment loans and "merchandise credit lines" are notbly hing more than a setup to get you into a dangerous debt trap. Many consumers find they aren't in a better financial situation when their loan is due and they simply pay a feel to roll it over and then pay around $60 every two weeks just to float the loan indefinitely, never paying down the principal balance.

What Can You Do Instead?

If you have bad credit, skip a payday loan or installment loan from First Choice Capital Resources and consider these alternatives.

Credit card cash advance. While cash advances aren't always a good idea, they can be a smarter move if your credit card doesn't have an existing balance and you won't use the credit card for any purchases after the cash advance. Even with a high interest rate, you will still probably end up paying less in the long run.

Borrow money from family or friends. While most people are uncomfortable about borrowing money, it's the safest way to avoid the debt trap and high fees from a payday loan.
Consider peer-to-peer lending networks like Lending Club and Prosper, which are approved by the SEC and allow you to borrow money if you don't qualify for a loan from a bank or have a credit score high enough for a credit card.