Life can be dynamic at times. Financial distress can leave you broke. The first option that comes to mind is applying for a loan from banks or credit unions or payday loans online. But they will reject you if you have a bad credit score.
Since emergencies can happen at any time, the best approach is to prepare as much in advance as you can. That way, if you do experience financial hardship, such as job loss, medical bills, unexpected car repairs, etc., you’ll be able to either borrow the money through a high-quality loan product or credit card or have the money saved to cover what you need. However, you can try instant payday loans online. Many online loan companies are committed to helping you access payday loans with no credit check at reasonable interest rates.
Make sure part of your future financial plan is to save money for emergencies. Some personal finance experts recommend you set aside 3-6 months’ worth of living expenses in an emergency fund. This fund should be a savings account you use only during emergencies but can access quickly when you need it. Here are some strategies you can start today to help avoid payday loans in the future.
1 – Plan ahead for emergencies
While 3-6 months’ worth of living expenses can sound like an overwhelming amount to try and save if you live on a tight budget, remember that every little bit you set aside helps. And that’s before you add the interest your money earns in a savings account.
Unlike money in a checking account, which sometimes charges fees, a savings account can help grow your money by earning interest. The interest on a savings account is known as the Annual Percentage Yield (APY). Be careful not to confuse APY with Annual Percentage Rate (APR) which is the amount of money you get charged for using a financial product.
Many online banks now offer pretty high APYs – at least compared to the national average – and don’t require a minimum deposit to open a savings account. So you can start a savings account with just a few dollars. For example, some banks offer an APY of over 2%, while some larger national banks offer closer to 0.03% as of spring 2019. When you get a savings account with a higher APY, you can grow the money you do have in your savings faster.
2 – Build your credit so you can qualify for higher-quality financial products
Aside from potentially trapping you in a debt cycle, many payday loans online don’t help you build credit even if you pay them off since they do not report your payment history to the credit bureaus. To gain access to more traditional loan products or credit cards with more competitive interest rates, it’s important to build positive payment history that proves to lenders you can pay back what you owe on time and as agreed.
When you’re pinched for cash, it can be tempting to fill out a five-minute application to get the money you need through a payday loan. But the quickest way isn’t always the best way, and you could end up paying for that single “payday” loan for years to come. So before visiting the closest cash advance store, be sure to take some time to look over your other options first.