Payday loans have long been the go-to solution for those with unexpected expenses. The problem is that these types of loans can often come with high interest rates, fees and restrictions. It’s easy to end up in a debt cycle if you aren’t careful. There are many alternative solutions to avoid paying these high costs.
One of the best alternatives is to build a back-up savings account. A robust savings account allows you to dip into your savings when necessary. It can also provide you with a sense of security. However, it can take a long time to save. To get the most out of your emergency fund, you may need to make a few tweaks to your lifestyle. Those changes include minimizing your vices and channeling savings into a back-up plan.
You may have heard that credit cards are the cheapest way to finance a temporary need. This is true for some, but the truth is that the best deals are usually available through small-dollar loans. These are short-term financing options that you can use for essentials like furniture or appliances. You can find these loans from banks and other mainstream lenders.
The good news is that you can find a loan for as little as $100. There are several online providers that offer this type of loan. When choosing a lender, be sure to check out their terms and conditions. Some lenders will ask you to deposit a portion of the loan into your own savings account. If you can do this, you will save money on interest.
Some of these small-dollar loans even offer instant approval. They’re a great option for those with poor credit. The only drawback to these is that you won’t have access to a credit check. To find the lender that’s right for you, it’s a good idea to research local alternatives. You can also contact your friends or family members to see if they have any extra cash that they can lend you.
Another option is to seek help from your creditors. In some cases, your bank or credit union will provide you with a much better rate. In other cases, you will need to apply for an interest-free overdraft.
You can also use your tax return to create a safety net. You can use this money to cover the unexpected expenses that occur throughout the year. This can be a great way to avoid taking out payday loans.
The best part about these small-dollar loans is that they can often be borrowed from a friend or family member without a credit check. However, be wary of promises that are too good to be true. A bad credit score won’t make you ineligible for a payday loan, but it will mean you’ll pay a higher interest rate.
To make the most of your money, it’s a good idea to shop around for the best rates. You should compare the APRs, the lender’s fees and the rollover options.
