Pouds till payday
Hints & Tips
One common way to get out of credit card debt is to transfer the balance onto a card with a lower interest rate. In this way you can pay less for the amount you borrowed. If you take out a payday loan to pay off debt then you are most likely borrowing at a higher interest rate to pay off a debt with lower interest rate. This would be the same as transferring your credit card balance onto a higher interest bearing credit card. You end up paying much more for the same debt.
Payday loans are usually suitable for meeting one off costs, especially when you know you will have enough money to meet your daily expenses as well as your loan repayment. In other words, this type of finance is ideal for covering immediate expenses when you are certain of receiving an income in the near future. Typically the loan term is 30 days with the repayment automatically deducted from your bank account using your debit card details.
Avoiding payday loans
Payday loans are designed to be a short term financial solution. Using these as long term debt solution will escalate your debt problems. You should browse the other pages on this site for information on where you can obtain some good advice on dealing with debt.
Payday Loans? A good
idea? Sometimes it makes sense to avoid payday loans and explore your alternatives:
You should avoid payday loans if you know that you will not be able to make the loan repayment in one lump sum without struggling. Missing payments can result in the rapid escalation of your outstanding debt, putting you in an even worse position.
Sometimes a longer term loan maybe better suited to your needs. Loans that spread out the cost of borowing can be more affordable.
If you are getting a payday loan to pay a utility bill then stop! You will usually be able to call the utility company to arrange an alternative payment plan. Often you will not be charged interest, making it a cheaper and easier alternative to a payday loan.
Avoid payday loans if you have access to an alternative loan with a lower interest rate. Examples of alternatives include loans from Credit Unions. Credit Unions now offer 1 to 3 month loans at a much lower interest rates than payday loans. In addition to this advantage, Credit Unions do not charge late fees or penalties. Leading payday lenders typically charge £25 per £100 loan, repayable within 30 days. On the other hand Credit Unions typical charge around £2 per £100. It pays to explore your options.
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Category: Payday loans