Are payday loans cheaper than using an overdraft?

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Are payday loans cheaper than using an overdraft_

There are many reasons why we might find ourselves in a financial bind or needing to get extra money fast. It could be an unexpected bill, a hefty car repair, illness preventing us from working or something else entirely. There are a few ways to get access to money quickly, with one of the easiest ways of borrowing to be to dip into your overdraft. What about if you don't have access to an overdraft facility, or you go over that? You can find yourself paying extortionate fees. Are payday loans cheaper than using an overdraft?

Are payday loans cheaper than using an overdraft_

In an ideal world we should have been saving into our emergency fund so that we have money to cover whatever life throws at us, but it isn't always easy to do. Life gets in the way, and with the increased cost of living, it can be difficult to save up enough money into our emergency fund.

When you need cash fast, you can look to earn some extra money and cut back on your outgoings, but what can you do when that isn't enough?

Most of us would turn to using our overdraft facility provided with our bank account, thinking that it would be the best option. Many of us wouldn't consider Payday Loans Bad Credit.

However, Which? has found that payday loans can be cheaper than using an overdraft facility.

Here's the maths: Borrow £100 for 28 days from a payday loan lender and you will get a maximum charge of £22.40. Going overdrawn without an agreement in place can cost you up to £90, depending on who you bank with. In this instance, payday loans are cheaper than using an unplanned overdraft.

Here are some other tips for needing cash in a hurry:

  • Compile a list of your outgoings and income -by compiling a list of your bills, the amounts you will need to pay and the due dates, you will start to regain control of your situation.
  • Prioritise – what are the absolute essentials that must be paid, and where can you let things slip this month and get back on track next month?
  • Look at things you can cut back on immediately to see a saving straight away.
  • Cancel your subscription services or pause them. This includes Netflix, tv package, your gym membership, your mobile phone contract and more. If you can't cancel or pause them look at downgrading them. When you are out of this rut you can look at introducing them back.
  • Smoking – give up entirely or cut back how much you smoke.
  • Grocery shopping – scale this back completely and look at what you currently have in your fridge, freezer and cupboards. You might be surprised at what you find! Then meal plan to make the most of the items you are buying. You can also rely on apps to get some freebies – I love Shopmium and Checkout Smart.
  • Bring your own lunch to work.

As with any borrowing, only borrow what you can afford to pay back, and make sure that you are getting the best deal for your situation. This is a collaborative post. 

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