Research was unveiled recently that a disturbing number of people are turning to high cost credit to help pay everyday bills – but you should avoid this fate.
While it’s an unfortunate fact, it has become all too commonplace for quite a few UK households to encounter serious financial distress almost every month – and usually right before the utility bill or the rent comes due. In fact, research studies have revealed that the number of Britons relying upon high cost consumer credit in order to make ends meet every month has increased by a marked amount over the past 12 months, but if you’re considering taking out a payday loan or using an unauthorised overdraft to bridge the gap just this once, you should realise that doing so is going to cause serious problems in the future.
The costs outweigh the benefits
The temptation of taking out short term loans from payday advance providers or turning to an unauthorised overdraft facility in order to get that pending mortgage repayment in under the wire or making sure the utility bill gets paid in time to keep the lights on and the house warm is assuredly strong, especially when you have a family that you have to take care of and, try as hard as you might, your monthly pay cheque just isn’t going as far as it used to. However, while the short term benefit may seem quite worth it, in the longer term you’re going to be even further up the creek without a paddle once it comes time to repay this lending – and also pay next month’s rent or utilities as well.
The cost of a payday loan can be prohibitive, especially if you take one out from QuickQuid or Wonga, industry leaders that charge an arm and a leg for the privilege of gaining quick access to cash. Wonga alone charges 4,214 per cent in annualised interest, making it a quite expensive endeavour to repay, and if you think using your bank account’s unauthorised overdraft will be a less expensive alternative you’re in for a surprise: between overdraft charges and daily fees, you can actually end up costing yourself even more using an overdraft than you would with a payday loan!
look for alternatives
Instead, you need to take action in finding alternative ways to safeguard your family home, such as approaching your local credit union for help, as these not-for-profit financial service providers are truly dedicated to providing low-cost credit to local residents as a welcome alternative to payday lending, unauthorised overdrafts, and other financially ruinous ideas. Many credit unions are even offering expedited loan applications in order to compete more directly with the payday lending crowd, and with interest rates on credit union loans closer to 20 per cent than 2,000 per cent, you’d be mad to pass up an opportunity such as that.
Likewise you need to approach a local debt or housing charity if you feel that your financial situation has begun to deteriorate where the possibility of losing your home has grown. Seeking help early can be the deciding factor in averting disaster, so don’t delay in the least and call up a debt hotline today if you have any fears.
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Image: Sign of the Times – Foreclosure by JefferyTurner