You have probably heard payday loans advertised as an easy way to get quick money if you are in a financial bind. You may have also heard about the cycle of debt payday loans can cause. So how do you decide whether getting a payday loan is a good choice or not? Consider the following questions while making your decision:



Why do I need the extra money?

Payday loans may help your financial situation if you are temporarily short on cash. For example, if your paycheck is normally sufficient for your monthly budget, but you encounter an unexpected expenditure, a payday loan may help cover the extra costs.

The unanticipated costs should include important or emergency bills only. These could be emergency medical bills or car repairs.

If rent, utilities, and other necessities take up most of your paycheck, a payday loan may not be your best option. If you will have trouble paying the loan back with your next paycheck or two, seriously consider other options.

Can I find an alternative to a payday loan?

If you have poor credit, you may feel like your choices are limited, but you still have some options for getting the money you need.

Cash advances on credit cards have a significantly lower APR than payday loans. The average APR for cash advances on credit cards is 30%, compared to about 470% APR for payday loans. Just because you have less-than-perfect credit does not mean you can't qualify for a credit card. Many credit card companies specialize in cards for consumers with bad credit, and getting a card may be easier than you think.

Credit counseling agencies can help you work out a schedule to pay your creditors back over a period of time. They can help reduce late fees and work as a middle man with intimidating creditors. This can help you get back on your feet and allow you to space payments out over a manageable time period.

If you do decide to get a payday loan, remember to shop around at several lenders for the best rates. Competition can be fierce between agencies, so you may be able to find a lender willing to offer lower fees.