A payday loan is an option if you find yourself in need of quick cash. However, it should not be your first option. Payday loans can be costly. They have to be paid back in full when you get your next paycheck. Your credit will suffer if you do not pay the loan back on time.
Many people have trouble getting out of debt because of payday loans. That is why it is essential for you to explore all of the alternatives before getting a payday loan.
Alternatives To Payday Loans
Consumer Credit Counseling
Making a few changes in your budget can make it easier for you to manage your finances. If you need help working out a budget and debt repayment plan, then you may want to consider contacting a consumer credit counselor. These services are usually available at little or no cost.
If you have a credit card that is not maxed out, then you can use it to pay your bills. You will not have to worry about paying any interest as long as you pay the balance off in full by the payment due date. You can also get a cash advance on your credit card.
Most banks today offer overdraft protection with their checking accounts. If you overdraw your account, then the funds will automatically be transferred from the credit card or savings account to your checking account. Banks will usually charge a small fee for this transfer. However, this fee is usually less than the amount that you will have to pay in interest on a payday loan.
Borrow From Your Retirement Fund
If you have a 401K or IRA plan, then you can borrow funds from it. There are no penalties for this if you pay the funds back by the due date. On the other hand, you may have to pay additional fees and income tax if you do pay the money back by the due date.
A great alternative to a payday loan is an installment loan because you have more time to pay it back. The interest rates on installment loans are also a lot higher. In order to qualify for an installment loan, you must be at least 18-years-old and have a checking account. Your income must also meet or exceed the lender’s requirements. In most cases, you can get the money deposited into your bank the next day.