Payday loans and cash advances are the quickest way to get the cash you need – but they aren’t the cheapest way. Like every other premium service you can get, these short-term loans have higher interest rates than banks. This is offset by their incredible turnaround time (you can receive funds from a payday loan within 24 hours) and small dollar amount (why borrow more than you need?)
But even with the interest rates associated with these loans, they are still your best financial bet in a number of situations. While it’s not smart finance to rely on cash advances, here are a few situations in which taking out a payday advance will save you money in the long run:
- Overdraft Fees and Bounced Checks
Most banks offer, or require that you sign up for, overdraft “protection.” This is a service that will cover overages on your checking account. Doing so incurs a penalty, which depending on your bank could be anywhere from $35 to $80. Having an automatic payment taken out of your account might push you into the red, and cost you more than a payday loan.
Similar is the case for the bounced checks, which carry an even higher service fee than other overdrafts. If the check HAS to be mailed, take the payday loan before it bounced and it will save you money.
- Late Charges or Service Cut-Offs
Most of us, at one time or another, have faced having a service shut off – be it power, water, utility, or phone, sometimes the payment is late and they want to shut you off. Although the inconvenience of losing your phone or power for a few days is bad enough, to turn your service back on will require that you not only settle the bill, but also pay an additional charge to re-connect the service.
Depending on the service, and the host company, a re-connect fee could be substantially more than the service charge on a short term loan.
- Fines, Tickets, and Legal Matters
If you have a speeding ticket, or any kind of legal financial penalty, then you all too well that the government doesn’t accept “I don’t have it right now” as legal tender. They want their due payment, and if you don’t pay it on time, there could be consequences – from even more fines, loss of driving privileges, or even worse.
For a $200 loan, the standard payday industry rate would be a $50 service charge. That means for $50 you could get square with your court costs or whatever payments are due, which isn’t a high price to pay considering the alternative.
As always, make sure to select a trustworthy and well-established lender for your payday loan needs. But when you have that connection – when you find a lender who meets your need for cash advances, don’t be afraid to use these loans when it will benefit you financially. It may not happen often, but it will happen.