Avoiding Payday Loans And Their Negative Consequences

Payday loans can be a good solution for those who find they need money because of an urgent situation. However, if you apply for payday loans without weighing the risks, you can be caught in a debt trap that can only worsen your current situation.

There are certain disadvantages in applying for payday loans. One very evident reason is the high cost. The annual interests can reach 400 to 800%. With this rate, it would be better to pay a visit to your neighborhood loan shark.

Suppose you ended up borrowing money and now you have a creditor. Some individuals will tend to borrow again from someone else or probably apply for payday loans in order to pay the creditors. This is not good and it would be best to talk to your creditors and ask if they can wait until your next paycheck. You can save a lot on the interest if you follow this advice.

Because of inappropriate financial planning, you will often resort to borrowing. At the start of the month, it is advisable that you set a realistic monthly budget so that you can already balance out your earnings and expenditures.

Don't make unnecessary purchases. Make sure that you keep a certain portion of your salary for savings so that when something comes up unexpectedly, you will have money to spend.

There are counseling bureaus that can help you out in preparing monthly budgets.

Urgent payments can be made through credit cards. The interest charges of credit cards are much lower than the payday loans. However I do not advise that, because your basically transferring debt however: It can be a temporary solution.

If you are a member of a credit union, They offer the best rates for members, and most of the time you get more time to pay the loan back with out a lot of interest and heartache. If you have the guts to talk to your employer, then you can ask him to give you a cash advance especially in the case of a medical emergency. Your employer will surely understand the situation.

If you can't fight the urge of borrowing, don't go for payday loans yet. Ask your friends or relatives if they can lend you money, and be honest when you expect to pay them back. This will only work if you don't have any bad credit record or if you paid your previous debts to them. Be careful when borrowing from relatives. Financial situations between family members have caused problems, and can damage relationships forever.