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July 14, 2016


If you need to borrow money and are thinking of getting a payday loan, stop to consider your options. Although easy to set up, a payday loan can quickly turn into a problem debt for many people. It can also affect your credit rating if you don’t pay it back on time.

Borrowing to pay for everyday essentials

A payday loan is almost certainly not the answer if you need the money to pay household bills, rent or a mortgage, or to pay back people you owe money to. If you’re struggling to pay for the essentials, speak to a debt adviser. They can help you do a budget, prioritise your bills, talk to everyone you owe money to and see if you can agree a repayment plan.

If you’d like someone to do this on your behalf or some expert debt advice, there are lots of organisations that can help with free, confidential advice. There’s no need to spend money getting a debt management company to help you sort out your money worries.

Money for non-essential spending

Payday loan companies often advertise using payday loans for things like nights out, new clothes or other treats. But if you do this, you’ll end up paying much more than if you waited and saved the money to pay for them. And if you just can’t wait, there are usually far cheaper ways to borrow.

Better ways of borrowing

Ask for a pay advance

If you need money before payday, it’s always worth asking your employer if they’ll give you an advance on your wages.

Borrowing from family and friends

Borrowing emergency money from a family member or a friend can help you avoid the risks that go with payday loans. But do make sure that both you and the person you’re borrowing from take the time to:

  • Work out a budget and a repayment plan
  • Discuss what will happen if you’re late paying it back or don’t repay it at all
  • Put your agreement in writing.

Using a credit card

If you’ve already got a credit card

You might be able to ask for a temporary increase in your credit card limit. But make sure you pay back the extra in full at the end of the month. Try to repay as much as you can each month as credit cards can be expensive if you leave debt owing or exceed the credit limit.

If your credit card application has been turned down

There are credit cards especially for people with poor credit scores and some of these companies accept people with poor credit history. They charge a much higher rate of interest than other cards but so long as you repay all or most of the balance each month they will be still cheaper than a payday loan.

Using an authorised overdraft

If you have a current account you may be able to get an authorised overdraft – or an overdraft extension – from your bank. The interest charged on overdrafts can be up to 19.5%. (Source: Money Advice Service comparison tables January 2014.) Yet as long as you use an arranged overdraft and stay within the limit, it will be cheaper than using a payday loan. Don’t be tempted to slip into an unauthorised overdraft as this can be very expensive and lead to serious money problems.


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