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Payday Loans Are Ways To Avoid Overdraft Charges

by Jim ONeil on December 31, 2010

in uk loans news

Bank overdraft charges are closing in on 20 percent, so smart consumers should avoid using overdrafts whenever possible. Several alternatives might be a better option for those who must make purchases now. Though each of these costs some money, the result may be more cost-effective than getting into overdraft debt.

One alternative is to complete the transaction using a credit card. To keep interest charges as low as possible, the credit card balance should be paid off as soon as the money is available. The total cost will be less than an overdraft charge and if the debt is quickly paid off, the transaction may make a positive impact on the credit report.

Another approach is to wait until there is enough money in the bank account to pay for the purchases. This may not be possible in an emergency but implementing this practice allows consumers to distinguish true emergencies from things that can wait for several days or weeks. Though waiting may be inconvenient, consumers may realize that the purchase is not necessary, making waiting a money-saving move.

A third option is to use a service to obtain a short-term loan that can be repaid in one or two weeks. These payday loans have interest rates higher than conventional loans but they also feature quick approval and funding. The interest rate may actually be lower than an overdraft charge if the loan is repaid according to the outlined terms.

Rather than incurring expensive overdraft charges, consumers should practice one of these approaches when making upcoming purchases. By completing the transaction on a credit card or taking out a payday loan and quickly repaying the balance, interest rate charges will likely be lower than overdraft charges. Waiting to make the purchase until funds are available may allow the consumer to realize that the item is not needed.


I have been able to get reimbursed for all charges in the past (not just the unauthorised overdraft but also the associated interest costs which dribble in for months afterwards) by claiming error.

You need to make a list of all the charges and take this to your employer. Phone the bank and get them to tell you what the interest charges will be. Ask your employer for help in getting reimbursed, present this as the two of you dealing with a clueless payroll company.

These charges are going to be a very large percentage of your cheque, they should be sympathetic.

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