Credit Control: Tips For Managing Your Money

3 Tips For Using Pay Day Loans Responsibly

9 December 2014

Levi Bradley

In today's economic times, it can be difficult to make your paycheck stretch until the next one. Even if you do have enough money to pay your bills and buy groceries, any unplanned emergency can pop up and put you in a financial bind. The good news is you can get a pay day loan, from a company like The Money Place, to help you pay those unexpected bills and other costs that pop up between paychecks. However, it is important to be responsible when you get pay day loans. Here are three tips to help you use pay day loans responsibly. 

1. Only borrow what you need.

Whenever you go to get a pay day loan, the loan servicing agent will ask you how much is the maximum you want to borrow. While it can be tempting to request the maximum they allow, only borrow the amount you need for your bills or to get by until your next paycheck. Even if you ask for $200 and they offer to loan you more money, it is not a good idea to take it. If you get in the habit of only borrowing the amount you absolutely need, then you will be less likely to find yourself in a massive amount of debt in the future.

2. Pay it back as soon as possible.

A big mistake that a lot of people make when getting pay day loans is they don't pay it back in full when they get their next pay check. Instead, they will make payments on the loan. This is a bad idea because it means that the lender will likely assess more finance charges and fees to extend your loan, which means you will have to pay back more money than you originally planned.

If you can't pay it all back with your next paycheck, pay as much as you can and plan to pay off the rest of the balance with the check after that. This will help ensure you do not have to pay very much in extra finance charges and fees for extending the loan.

3. Don't take out more than one pay day loan at a time.

Pay day loans are great at helping people when they are in a financial bind. Unfortunately, some people get in such a financial bind that they need to get pay day loans from various places at one time. This is not good because, while you could feasibly pay back one pay day loan with your paycheck, there is likely no way you can pay off more than one.

Use the one pay day loan to cover the necessary bills (i.e. rent or car repair) you have at the moment and see if you can arrange payment plans or payment extensions for the other bills. You will likely find that you can get payment extensions for several bills and only need the one pay day loan after all.

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