Monthly Archives: November 2014

How Short Term Lending Can Provide Temporary Cash To Avoid Overdraft Bank Fees

If you find yourself short on cash with bills needing to be paid, you may think that taking the hit of overdraft bank fees will save you more than taking out a short term loan. Listed below are three reasons why short term loans are usually a more favorable option than acquiring overdraft bank fees.

You Will Know the Exact Amount You Will Be Required to Pay Back
When taking out a short term loan or unsecured loan, with the intention of paying it back in full on your next payday, you will know exactly what interest and fees will incur, and the exact amount you will be paying.

Unfortunately, overdraft fees are not always so straight forward. Some banks charge an overdraft fee only once per day, while others charge for each separate transaction. You can also be hit with a daily late fee for each day your account is in arrears.

You Decide When to Pay Back the Loan Amount
While many choose to pay short term loans back in their entirety on their next payday, you decide how soon you would like to settle the balance. While waiting to pay back the loan will result in more interest being paid, this is flexibility that many banks do not offer. These loans, which are offered by some backs, credit unions, online lending providers are not necessarily the best option at all times, and a borrower should always review the lending terms, finance details and make sure they can afford to repay the loan in a timely manner.

Once an account is in arrears, it can be indefinitely closed, while still acquiring daily late fees. There is usually a maximum limit that the bank can charge to a closed bank account, but if you choose to walk away without paying off the balance, other banks can deny your opening of an account.

Overdraft Protection Programs Tend to Have a Lower Credit Limit
If you signed up for overdraft protection with your bank, you may think you made a wise decision. Do you really know what you signed up for though?

As mentioned above, overdraft fees are not always as straight forward as your bank would have you think. The fee could vary from $10 – $35, depending on the transaction, and furthermore, you could be charged a fee for each transaction, no matter how small. That $4 latte has now turned into a $35 latte, and that $10 tank of gas has now become a $35 one. That is $70 in one day, with total money spent only $14!

While it is never good to depend on your bank or short term lending companies to pay your bills, life happens. If you find yourself short on cash but needing to pay bills before your next payday, consider a short term payday loan. Fees and interest rates are predictable, you will have a little more wiggle room to pay it back in full if needed, and your credit limit if higher, allowing for some emergency cash if necessary.