Payday loans are becoming more common as the financial crisis bites and people are forced to stretch their money ever further.
Banks and credit card companies keep moving the goalposts, demanding more money and charging extortionate fees if you miss a payment.
Faced with an outstanding invoice for a credit card payment, or an overdue bill, many turn to payday loans as a way of avoiding charges for late payments and keeping the debt collectors at bay.
This is the idea but, are payday loans as good as you think they are?
Banks and credit card companies keep moving the goalposts, demanding more money and charging extortionate fees if you miss a payment.
Faced with an outstanding invoice for a credit card payment, or an overdue bill, many turn to payday loans as a way of avoiding charges for late payments and keeping the debt collectors at bay.
This is the idea but, are payday loans as good as you think they are?
What is the reasoning behind a Payday Loan
The basic idea behind a payday loan is that it helps out if you have a cash flow problem just before payday, a problem that has happened to most of us at some point.
Imagine that you are struggling to stretch your monthly budget last until payday, and an unexpected bill arrives. One option is to ask the boss for an advance, but apart from the embarrassment, few companies allow managers to give employees early pay.
Imagine that you are struggling to stretch your monthly budget last until payday, and an unexpected bill arrives. One option is to ask the boss for an advance, but apart from the embarrassment, few companies allow managers to give employees early pay.
Another option?
The other option is to use the credit card to cover the bill, paying off the balance at the end of the month, before the charges and the high interest rate bite.Unfortunately, credit cards are now part of the problem, and people are much more reluctant to use them. In addition, many of the cash flow problems are caused by over-reliance upon plastic money, and a single missed payment risks opening up a spiral of increasing debt.
Payday Loans - the safer option
Payday loans are the best option for alleviating cash flow problems and making sure that you can cover any outstanding costs.The whole process is easy, and relieves most of the worry arising from unpaid bills with 'Final Demand' stamped across them.
You visit a payday loan provider, show some ID, write a post-dated cheque and collect your advance, there and then.
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Most payday loan providers allow you to postdate the cheque for up to 28 days, so you have access to money before payday, which can get you out of a tight corner.
Aside from credit card bills, having your electricity, gas or water cut off, for late payment is not only inconvenient, but means that you will have to pay out extra money for reconnection, just when you can least afford it.
Aside from credit card bills, having your electricity, gas or water cut off, for late payment is not only inconvenient, but means that you will have to pay out extra money for reconnection, just when you can least afford it.
Payday Loans - are there any hidden costs?
Of course, payday loans should not to be relied upon as a regular way of making ends meet and, if that is the case, you need to reassess your budgeting and spending. However, for unexpected bills or emergency situations, such as urgent repairs to the home or the car, they are a great option.Payday loan providers take a small service charge, but this is far preferable to using already maxed out credit cards, or risking an expensive unauthorised overdraft with exorbitant charges.
In conclusion
Even if you have no need to use a payday loan service at present, it is handy to remember that the option is there. However much you earn, or however meticulous the budgeting, there is always the chance that you can overlook a bill, or need an emergency house or vehicle repair. A payday loan is a great way to stop a financial crisis from spiralling out of control.
by Jamos
Julie-Ann Amos runs an international copywriting agency, based in the UK. Julie-Ann has written for a wide range of publications and has 14 books in p... (more)
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