Bills have to be paid. Bills like the mortgage, heat, gas, school fees, car payments, medical aid, the store cards, the payments due on the credit cards. Out of all these bills there is only one that keeps on giving back. Credit cards. Along with the tendency for people with financial difficulty to take out credit in the form of credit cards, there is also a tendency to bleed the Payday industry as well. These are citizens faced with the problem of not being able to pay for the cost of their lives and who are forced to find emergency funds where ever they can. With the current attitude of pretty much all the conventional financial institutions that could make loans available there aren’t many options. Getting a loan from a bank or a building society takes about the same time and effort as winning an Olympic gold medal. Most people can’t dream of filling all the requirements that a bank needs these days to issue any kind of credit. When the list of the bills that must absolutely be paid begins to mount there are few options.
Emergency loans are available in the form of Payday loans and Credit cards. But the million dollar question is are these loans suitable to use for emergencies and if it is not going to be easy paying them off quickly how long will it take to drown in the interest.
Credit cards are easy to come by. The Credit card industry is keen to sell their wares, and most cards look fabulous on the big glossy advertisement, boasting 0% interest for a certain period of time, cash back rewards and discounts at retail outlets, and other promises. A lot of these companies rely on the fact that less than 20% of people signing up for a card take the time to read the fine print. At closer inspection that fine print starts to list a whole load of ‘ifs’ and ‘buts’ that most likely disqualify most people from all the shiny promises that were supposed to come with the card.
Another solution for households in desperate need for emergency cash to survive is one of the most accesable loans of all. The Payday loan. Payday loans are easy to apply for, often approved on the same day if not on the spot, and there are not many requirements to qualify for one. The catch is that the interest rate on Payday is high. Much higher than any other loan, so if confidence in paying the loan back timeously is solid then this loan can work. If, however, the Payday loan is the last resort and there isn’t a plan to pay I back the interest becomes a force of destruction.
What has become a common solution, or lets say a patch up job is that often this emergency situation only escalates to signing up for a credit card, taking out a Payday loan to pay the credit card, signing up for another credit card to pay back the Payday loan and the viscious circle begins to turn. The debt charity Step Change who offer free counseling and debt management often find them selves helping people who have five or more maxed out credit cards, and several Payday loans that have been rolled over two or three times with the result that the interest almost outweighs the actual loan itself. The moral of the story is to make sure you read the fine print and that you have a plan on how to pay that emergency loan back.