The truth is, payday loans are very costly. Many people look at payday loans as another type of income – but they’re NOT! The cost of borrowing is very high.

You end up paying more than you get – a LOT more. The average interest on a payday loan is about 400%, but can be up to as much as 5,000% – compare that to the average credit card at 12% and the average personal loan at 7%. Plus, if you’re late in making a payment, you could end up paying more in interest than what you borrowed very quickly. It’s better to use a credit card for emergencies than getting a payday loan, if possible.

Here are some other alternatives to payday loans you might consider:

-Take out a personal loan. Lift Credit offers much lower rates than other lenders.

-Check if you have overdraft protection on your bank account. Some credit unions or banks offer it for free, and some charge a fee, but if you’re regularly using most of your income and are close to zero, it could save you from further credit problems.

-A cash advance on your credit card may be a cheaper option than a payday loan. The rates are still very high, but usually not quite as much. Contact your card company and shop around to compare offers – you want the lowest APR and finance charges possible.

-Contact your creditors if you are having trouble making payments and ask for an extension – and do it quickly, as soon as you realize you can’t make a payment. May companies are willing to work with customers who act in “good faith.” You could incur a late charge, an additional finance charge, or a higher interest rate, but do the math to see if that’s cheaper than paying interest on a payday loan.

-Each state has non-profit groups dedicated to offering credit guidance at little to no cost, called consumer credit counseling services. They will help you work out a debt repayment plan with creditors so you don’t get stuck needing a payday loan as often.

-Budget! Try to avoid unnecessary purchases, which will cost you way more in the long run if you have to take out a payday loan to get by. Try to build some savings in an emergency fund so the next time you’re strapped for cash, you’ll have a buffer against financial emergencies.

“But wait,” you say, “Aren’t you guys a loan company?”
Yes, we are! But we know the cycle of debt is really hard to break, so we offer lower rates than other companies in order to help you get out of tough situations, not make things worse. We realize sometimes people need cash, and that there are situations that call for quick loans – which is why we exist!

Use caution and pay back the amount borrowed as soon as possible. Only borrow as much as you can afford to pay back with your next paycheck, and still make it to the next payday. Many people fall into a bigger debt trap if they can’t pay back the loan quickly by incurring super high interest charges and fees.