Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Sep 17, 2018
There is a common misconception that a payday loan will result in nothing but excessive debt. However, this opinion is quickly shifting, and people are beginning to understand that a short-term loan can actually save the money rather than cost them it. While it is true that the APR on a payday loan is typically much higher than that offered by traditional financial lenders, such as building societies, banks and credit card providers the length of time that it is borrowed for means that the total repayable amount is actually pretty low. As an example, someone who uses the services of Sure Money UK to secure a payday loan of £100 for a period of a month will typically pay back £124.
When you consider that many banks and credit cards will charge up to £24 in fees per late payment. As an example, let's imagine that you use Barclays Bank. You are £189 into your £200 overdraft. You are a couple of days past your payment date so you receive the statutory £12 late payment charge. This £12 charge takes your balance to £201, which automatically results in a further £12 being added as you have gone over your credit limit. Of course, there is a buffer limit that will allow you to go over a certain amount for a set amount of time, but this just shows how quickly late payment fees and over the credit limit fees can begin to add up.
One of the more shocking British banks to impose ridiculously high fees is NatWest. If you happen to go more than £10 over your limit and do not have an arranged overdraft, you can be charged £8 per day for 9 days in a row. That can quickly add up to £72! If you have problems will clearing the amount, the following month the same charges can be applied, and within a year you could be up to £864 in debt to your bank. Typically, the majority of people go over their limit without even realising and as many banks continue to use postal mail to notify customers, it could be up to a week before you even know that it has happened.
A payday loan of £100 would allow you to clear your minimum payment on time and prevent any added fees being accumulated. While there are caps on the number of fees and charges that a bank can charge anyone within a one-month period, these can all add up quickly and make it difficult to get on top of it the following month. While the decent thing for any bank or credit card to do is to notify the customer that they have gone over their agreed credit limit, unless the individual is signed up for online banking or an SMS alert service, communication can be extremely slow. This is why it is always important to check your bank account regularly and by doing so, you are better prepared to cover any expenses in a short amount of time.
If you have already experienced 1 months worth of over-limit fees and are worrying about how to pay for them, a short-term loan or a payday loan can help clear the balance and spread the cost of repayment over a period of 1 to 6 months. When you compare the average cost of a payday loans APR with the charges that are being slapped on you by your bank, you could potentially save yourself £48 a month. There is a school of thought that many of the scaremongering stories about payday loans are put out by traditional financial lenders as a way to prevent their customers from going elsewhere. Managing your finances is an unpleasant and unfortunate side effect of being an adult and not everybody is able to budget themselves to see the month through.
While an ideal world would say everybody having a nest egg set aside, the real world is not as simple or straightforward as that. Sure Money UK understands this and is there for those when needed. If you stay in credit and pay your bank charges on time, then the bank manager will be your best friend. However, even the slightest slip-up can lead to your debt spiralling out of control and have the bank chasing you down on a weekly basis.