Credit cards had taken the world by storm when they arrived. Soon enough, every second person in the world had a 3×2-inch plastic card in their wallet – a metaphor for financial independence. Or is it addiction that would eventually prove disastrous for those who throw caution to the winds? It is, perhaps! Absorb this, 6% of households in Great Britain use credit cards to pay their rent and mortgage. Considering the “plan B” nature of credit cards, this dependence is truly disturbing. Most of us end up whinging about payments that we cannot make, while the card providers down pints to celebrate higher overdrafts and late payments.

Payday loans, a more recent entrant into the personal finance space, are yet to reach these levels of infamy but have received a fair amount of bad press. A short-term credit option with steep interest rates, this financial product is the media’s most favoured knuckle sandwich, with the spotlight of ire gradually fading on the credit card industry. The common man may have a different opinion, often turning to this cash alternative when finances are tight and quick cash is on the mind. Experts have also spoken about the usefulness of this product when treated with responsibility.

To conclude, it ultimately comes down to how prudent a customer is with his/her handling of either a credit card or a payday loan. Using a card for regular expenses may get one into an endless cycle of debt, while defaulting or stretching a payday loan payment would end up being a needless strain on the budget. So, which of these options is more expensive and how sensible is it to use them? The answer is: it is the customer who decides!

People believe now that when there is a financial hiccup, the easy way out is to turn to a loan. It might not be the most convenient way to tackle a crisis situation because of the time consumed by procedures and formalities. The newest development in the debt and finance situation is the sudden gain in popularity of  short term loans and payday loans. The biggest difference between those who turn to a payday loan and those who turn to a bank loan is the fact that one bunch knows how long their situation will last and the other does not.

This is the reason why many people choose to make the expensive purchases with loans , while the small urgent cash needs are taken care of using payday loans and short term loans. Payday loans have become more borrower friendly these days. Introduction of easy repayment plans and no penalties for prepayments have done the trick. Although 27% of UK buys cars only with loans, people must remember to save and make huge expenses with saved money rather than extend debts over long periods.  As for overdrafts, they are becoming overwhelmingly alarming these days.

When it becomes difficult to manage living costs due to such fluctuations of the economy, our monthly budget tends to get out of hand. Costs keep rising, and income does not. These are tough times to get by, and this is when you might get caught up in a cash emergency. If that is the case, then you shouldn’t worry, since you can turn to online loans when you face a cash crunch.

Recently, there have been seemingly better reviews for online loans, with borrowers feeling confident enough to rely on online loan lenders for their temporary cash needs. You most probably are already eligible for a payday loan, if you are 18 years or above of age, if you get paid monthly, and earn a minimum of 750 GBP through regular employment, and if you have a bank account along with a valid debit card, then all you have to do is apply for one online.

All the traditional sources of credit fail to serve to the most basic need of a borrower – they do not offer short term credit, and they do not offer small loan amounts. Besides this they have a collateral that you need to provide as security for them. When all these factors are considered then you will find that getting some cash through online loans is your best option, when you face a cash emergency. There was a time when payday lenders were considered as loan sharks, but times have changed and opinions have too. If you have looked at the news recently you would know that payday lenders are doing well in the UK. Payday lenders have become responsible and so people have started relying on them on a regular basis. People need cash without any hassles, and online loans are the only way they can get some.

Credit Action which is a money education charity in the UK, is of the opinion that traditional banks can do more to supply people with credit, whereas the British Bankers’ Association says they are already doing as much as they can. They say, that every bank has to perform a risk assessment for a lending proposal, and it is not worth lending money if it will not be repaid.

Payday lenders offer people an alternative to apply for cash. They know that people who do not have perfect credit scores are high-risk borrowers, but they still provide them with a loan based on a simple eligibility criteria, and basic credit checks. This justifies their high interest rate. If people are still sceptical about these high cost loans, then they should consider the fact that payday loans are meant for a short term, and the interest rate will affect them only if they roll-over the loan. Even for these cases there are some lenders who offer flexibility in repaying a payday loan. Borrowers should carefully pick the payday lender or the loan product they want to use.

The research that threw more light on payday lending in the UK, reported that in 2009 people in the UK borrowed £1.2 billion from payday lenders, and that there were 1.2 million active payday loan customers last year.  Around 60% of the borrowers are unmarried or cohabiting, and around 55% or the borrowers are under the age of 35. The average loan amount borrowed is £294, and each borrower had three outstanding loans last year. There were a total of 4.1 million outstanding loans in 2009.

The payday loan industry had an income of £242 million in 2009, which is only 20% of the total loan amount lent. It was found that borrowers were mostly young adults with an income of less than £25,000, although they had a fair credit history. Most borrowers did not have children. Borrowers said that they found the payday loan approach more straightforward, and direct, to solve their temporary financial problems, and they had borrowed only when they were in substantial debt.

Responsible payday lenders inform the consumers that payday loans are only to solve temporary financial needs, and that they should consult a debt consolidation agency, if they are in constant debt, or are facing long-term financial problems. There have been cases of people getting into a cycle of debt due to payday loans, but while genuine lenders follow a responsible lending policy, people should also borrow responsibly. Borrowers should also research more about the different loan products available online. Some payday lenders provide flexible repayments, while others provide roll-overs.

Following this several customers of Anthem received letters and pre-paid debit cards in-spite of not applying for one. Few people had payday loans taken out in their names, which they weren’t aware of. Identity fraud is rampant, and so are other kinds of fraud, such as utilities fraud, benefits fraud and medical fraud, and these can be undetected from credit checks till they fall into the collections process. You should be an informed customer and apply for a payday loan only at a lender who offers you Data Protection, and treats your personal information with extreme care and security.

If you want to apply for a short term loan to a secure lender or a direct payday lender, then you need to be 18 years or above of age, and have a job that pays you monthly. You should also be residing in the UK,  and having a bank account with a valid debit card.

The fact is, if the finances of people in the country do not improve, it takes a toll on the country’s economy. Government’s always have a contingency plan to fall back on, in case of any mishaps. If you are struggling to manage your finances, then you need to take one shot at setting your budget on track. You should apply for a payday loan to get you back on track with your expenses. You might wonder how getting a loan can help you manage your expenses, but  the fact about payday loans is that it is not an amount that is larger than your salary, over a year’s period. It is actually an amount that you can return using your next pay cheque. Unlike long term loans that hook you onto repaying instalments for months together, payday loans are short term loans, and thus end within a comfortable time frame, and do not prolong disbursing cash from your pay cheque for a long time.

So if you have a stable job with a monthly pay cheque then you can apply for a payday loan. In addition to a job, you need to be 18 years of age or above, be a resident of the UK, and have a bank account and a valid debit card, in order to receive the loan.

A smart borrower tends to stay away from debts,  by repaying any loan as soon as possible. You have to be extremely careful while balancing your financial commitments using a loan, especially if you have applied for a payday loan. True, payday loans are high cost loans, but they tend to affect your finances only if you do not repay them back in time. If you are a smart borrower, you will use a payday loan only for the short term, and you will be able to get the best benefits out of them. Borrowers who tend to overshoot their repayment dates are the ones who suffer, and then the blame the lender for the high repayment that they have to make. There is bad blood between lenders and borrowers, because of certain borrowers who don’t respect their limits, and certain lenders who are inconsiderate about the borrowers needs. Moreover a lender can be rejected or spoken ill off even when the borrower’s application is rejected, whereas the lender would actually be looking out for the borrower’s good, so that they do not increase their financial burden, by turning them down. Borrowers are customers and thus increase the lenders business. A smart borrower would know this, and know the difference between genuine and fraudulent lenders.

The latest numbers from the Insolvency Service have shown that most people in the UK are struggling with different kinds of loans. Although, there has been a general decrease in the number of bankruptcies in England and Wales, there has been an increase in the number of Individual Voluntary Arrangements (IVA’s) and in the number of Debt Relief Orders (DRO’s) in these places. A similar situation persists in the Scotland and Northern Ireland. You can look at these numbers in detail at their website.

It is true, that it is unwise to borrow more money when you are already in a debt. But, it is necessary to repay the money you owe others, and it is even more unwise to keep defaulting on repayments, and extending the debts. If you stand firm you can put an end to your debts. Starting with the small amounts that slowly drain your savings, you should start repaying your debts. You should remember that the only reliable source of credit you have is your pay cheque, and you should only depend on that money to get you through your crisis situation. You can apply for a payday loan, which essentially brings you money from your own pay cheque, but well in advance for you to make the right use of it. But, you should also remember to clear the loan as soon as your  payday arrives. You should also remember to track the extent of your debts, and depending on your finance management plan, you might need a debt consolidation plan, instead of a loan to manage your finances.