When is a payday loan the right choice?

The answer is - almost never.

A payday loan is some of the most expensive money you can borrow. You are better off trying to get money from just about any other kind of loan first. Only in direst financial need should you resort to a payday loan.

Why is the payday loan such a poor choice? Cost. A payday loan comes with a fee per amount borrowed.

Let's say you get a payday loan for $100 and have to pay a $15 fee for it. That gets you the money for a mere two weeks. A credit card at 19% interest would take you most of a year to charge you $15. If you need to roll over the loan, you pay the fee over again. Shortly this type of loan can leave you in an even worse financial situation.

Clearly, this just isn't worth it for a night out. Use a payday loan if it's borrow or lose the house, if it's the only way to feed your family and so forth.

What alternatives do you have?

Plenty in many cases.

You can ask your creditors for more time. Generally this will cost you far less than the payday loan.

Does your bank offer overdraft protection? This can help you keep your finances from being drained by bounced check fees.

You can get other kinds of loans or credit cards. Get the lowest APR and annual fees you can. Borrow from family or friends, although you are best off paying them back as quickly as possible to keep the relationship healthy!

Take a look at your budget. If you have to resort to a payday loan, it's time to see where you can save some money. There are many places online to help you. There is a group on Yahoo! called 4 on 4, which is all about feeding a family of four on $4 a day. There is a website called Budget 101 which also has some very helpful tips. Cut everything you can from your budget until you get your finances under control again.

If you absolutely must use a payday loan, keep it to the minimum you need.

If you have to get a payday loan, it may be time to start thinking about debt consolidation and find some reputable debt consolidation companies to help you get back on your feet.

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