Despite the predatory nature of most payday lenders, the short-term convenience and quick access to funds that payday loans provide has kept their business strong. Most consumers are either unaware of the incredibly high fees and risk of incurring more debt, or are in such desperate need of cash that they don’t take time to consider the alternatives. But there are other options! Instead of getting caught in a downward spiral of increasing debt and decreasing repayment, try one of these four alternatives to payday loans and keep your money where it belongs: in your wallet.
1. Personal loans – Not all loans are bad for you. Many credit unions offer fair interest rates and flexible payment plans on their personal loans. Depending on your credit history, you could take out a Signature Loan or Signature Line of Credit at CU Community Credit Union and get up to $5,000 for your financial needs. They also have a Debt Consolidation Loan, in case debt is already a serious issue. CU Community will devise a personalized plan to consolidate your debt, through a personal loan, home equity loan or auto loan. The amount of funding you receive will depend on your credit history and collateral.
2. A secured credit card - If large amounts of debt have hurt your credit score, you can help yourself recover by taking out a secured credit card, which you can also use to meet short-term financial needs. CU Community Credit Union’s Share Secured Visa has a fixed APR of 15% for purchases and balance transfers. There are no over-limit, cash advance or annual fees. You even get a 25-day payment grace period. Be sure to stay on top of your account and avoid late payments because that will keep your credit score from falling further.
3. Debt counseling services – Don’t be afraid to ask for help. That is the number one rule when it comes to personal finance. If debt is piling up around you and you don’t know how to get rid of it, seek assistance. Try your local credit union—they may provide access to debt relief services for members. Last month, CU Community Credit Union partnered with Consumer Credit Counseling Service to host an open house for anyone looking for better money management tips. Counseling can improve your financial education and give you the knowledge you need to avoid the same mistakes in the future.
4. Make a Budget – This is something you should be doing no matter what your financial standing is. One of the major causes of financial instability is a lack of planning. Take time each month to account for both known and potential expenditures. If it helps, make a calendar with due dates for bills, and loan or credit card payments. Estimate how much you spend on groceries and other household supplies each month, and make sure your total expenses do not exceed your total income. Try to save a bit of money every week or month and put it in a savings account. You’ll have emergency funds and your money will continue to grow as you earn interest.
Nico Leyva writes for Nerdwallet, a consumer finance website that promotes financial literacy and looks for the best ways to save you money.