A quick note on payday loans
If you still have an income, payday loans can be tempting because of their immediacy. You fill out an application with some personal information and proof of income. If you’re approved, you get money. Easy enough.
But depending on where you live, the interest rates and fees associated with payday loans could be 500% or more, which could leave you with thousands of dollars owed on top of the few hundred bucks you originally borrowed.
Payday loans have the potential to send you into a cycle of debt, so if you can avoid them and take advantage of other options, you should.
Take a look at some of these alternatives:
1. Low- to no-interest credit cards
Ah, credit cards. When your bank account is running low, they can be a life-saver if you need to buy groceries or pay your electric bill.
But you have to make sure you can pay them off at the end of the billing period. If not, you could get hit with some pretty high interest rates (APR). The average interest rate in 2020 so far, according to the Federal Reserve, is around 16%. That’s not something you want to take on, if you can avoid it.
That being said, there are credit cards that offer introductory periods with low-to-zero APR — some for up to 18 months. If your credit is good, and you can still make monthly minimum payments, this is a free (or cheaper) way to borrow money.
Before making a move, you’ll want to compare your options. For each card, take a look at its APR, rewards, fees and any fine print.
2. Personal loans
If you’re not able to pay off your credit card fully each month, a personal loan could have better rates. This can be a good choice for people who need to borrow more than a few hundred dollars.
Not sure where to start? A website called AmOne can help you compare your options and get you hooked up with a more affordable loan.
If you need to borrow up to $50,000, AmOne will match you with a low-interest loan. It takes all of two minutes to see your options — no need to stand in line or call your bank.
The interest rates are pretty good — they start at 3.49%.
AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.
If you’re worried you won’t qualify, it’s free to see if you qualify online. It takes just two minutes.
3. Payday-loan-alternative apps
If you need to borrow a couple hundred dollars to get you to your next paycheck, there are some apps that just might be able to help you out.
Brigit, for example, takes little time to download, and it doesn’t require a credit check. It lets you borrow up to $250, which could be what you need to avoid a pesky $35 overdraft fee. There’s no interest, though you’ll pay a $9.99 monthly fee.
There are also online banks that’ll help you out in a pinch. For instance, Chime has a feature called SpotMe, which allows you to overdraw on your debit card purchases by up to $100 without fees.
You’ll have to qualify to use this, but it’s worth looking into if your checking account balance is getting low.
So before you do something drastic to get out of that financial pinch, do your research to figure out the best way for you to borrow money and ease some of your money stress.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.