A guide to the best ways of dealing with short term debt

Getting into debt is an uncommon occurrence in today’s world. As the economy slowly recovers from the impact of the recession, more and more people are finding themselves subjected to tighter credit providers. This is making it harder to obtain the credit that might be required to deal with immediate debts that need to be paid.

If you are someone who is struggling financially and have a number of bills stacking up that you need to address quickly then you should rest assured knowing that there are a number of courses of action you can take. This guide will give you an idea of what to avoid when in short term difficulties and where you can go to acquire the money you need to bring relief to your situation.

Avoid Payday loans

Payday loans are a fixed rate, high interest loan that are usually available to people with poor credit ratings. They often entice people by guaranteeing approval and promising the money requested to be deposited into the borrowers account within the same day. However, the costs of these loans are supremely high and the APR rates can be in excess of 200% which is immeasurably large considering most credit cards are below 20%. It is important that if you are struggling and need money that you do not go to these services as they can often lead to getting even worse and unmanageable. They can often harass you with numerous daily phone calls and may even pass on the details you give to third parties who will continue the pestering. If you need money look at alternate short term loans that don’t have such interest rates.

Request an overdraft

Many banks offer overdraft facilities to their customers on request. The AER rates on these are far lower than a payday loan often ranging from 12-25%. You will have to contact the bank and ask them if they can authorise an arranged overdraft. If accepted you will be granted an overdraft within the same day that you can then pay back in more affordable repayments. Check out your banks offers today to see if they can provide you with this service if you require it.

Look at a loan from a Credit Union

Unlike payday loan companies, credit unions do not function for profit and offer loans that don’t have such high interest rates. Credit unions offer long term secured loans and short term and typically have AER rates of around 25%. They are community based and in order to acquire one you must share a common bond with other members of the union. This might include residing in the same area or simply sharing the same boss with members. Going to a credit union can be a good way of getting money fast without having to worry about money getting to an unmanageable level. Many offer a loan service to people with poor credit ratings as well so it is definitely about looking into these before going to a payday loan company.

To find your local credit union access the Association of British Credit Unions (ABCUL) online page and see what interest rate they can offer you. Most should not be higher than 30% which is far better than a payday loan. Make sure you make your repayments on time though because you can be ejected from the union if you are shown to be a reliable borrower.

Get a Budgeting Loan

Budgeting loans are a facility offered by the government that are intended to provided money to people to cover their essential expenses. The government make these available to people who are receiving benefits such as jobseekers allowance, income support, employment and support allowance or pensioners support, so that they can cope with any debts that might be building up. They are interest fee and are repayable over a two year period making them an attractive deal to people who are looking to get money quickly. The maximum you can get from a budgeting loan is £1500 so if you are someone who is need of larger amounts of money then there are better courses of action for you.

In order to obtain one you have to meet the criteria specified above and will have to apply to the Department of Works and Pensions. You will need to provide details about your finances, income and expenditure and they will review this to determine how much money they can offer you. Though budgeting loans are specifically tailored to certain people they are nonetheless a viable short term money solution for those who need to obtain cash quickly.

 Get a 0% balance transfer credit card

Getting a credit card from a reputable bank should be the first course of action you should take if you are looking to acquire money fast. A bank is bound to a stringent code of conduct and does not charge the huge APR rate that a payday loan or other external lenders might offer. Most credit card providers will give you an initial interest free period which means you can utilise your credit to pay off bills without having to address the debt immediately. Following this period you will have to pay interest but this will be at a fixed and manageable rate. You will also benefit from the flexibility of having longer to pay back what you owe then a payday facility.

You can also look at whether your bank offers a 0% balance transfer credit card. If you obtain one of these then you can transfer debt you might have on card with a higher interest to this new one. Interest on this will be at a 0% rate and means you can manage your money in a way that is more convenient for you.