The problem is that they can also dig you deeper into debt if you do not manage the debt carefully. Many people have lost big money with payday loans--but this is primarily due to their ignorance and the fact that it's a slippery slope they never learned to navigate correctly.
Before you take out a payday loan, there are some basic things you need to ask yourself. For example, do you really need this loan, or is this simply to pay for something that you want? There is a big difference between "wants" and "needs" and if you don't know that it could explain why you are getting yourself into financial trouble in the first place. You also need to ask yourself if you can actually repay the loan on time without having to take out another one. Using payday loans effectively is all about responsibility. If you can manage one responsibly, then payday loans can be the godsend you've been looking for.
Payday loans are perfect for emergencies; for example, if your car breaks down and you have no other way to get to work. And hey, if you know you will be getting that bonus next month and you just can't wait another day (never mind another month) to get that wide screen TV--or if this is the last week it's on sale--then go for it. Just make sure you pay it back as soon as you can.
This doesn't mean you shouldn't a look at all of your other options, from cashing in some of your stocks to asking your boss for an advance on your paycheck to even hitting up your parents for some cash. There are always credit cards to consider using as well; just remember to make a point of paying off what you spend as soon as you possibly can. But if you are among those who don't have other options (or bad credit), consider payday loans--after all, essentially anyone with a job and a bank account can get one.
Determining the amount you should take out when getting a payday loan is another consideration you should make. Just because you are able to get $500 dollars does not mean that is how much you should borrow. Only take as much as you need; this will help you to save money on interest and make it that much easier to pay off when you do get paid.
Many people get sucked into the roll-over cycle with their payday loans. What happens is that they can't or don't want to pay off the loan in full right away, so instead they roll it over for another month. This may sound like a good idea; however, it's a costly one. When you do this you accrue all kinds of extra charges like late fees and even more interest. This can leave you repaying significantly more than you borrowed. Avoid this if you can, even though it's nice to have this cushion to fall back on.
Payday loans have helped millions of people do everything from taking a trip they have always wanted to paying the rent and buying much-needed food and grocery items. This is not a form of lending that should ever be overlooked if you find yourself in bind--just make sure to wade through the payday loan pool carefully.
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