How to Avoid Payday Loans

Although they’ve grown in popularity over the course of the last decade, payday loans have managed to build up an extremely negative reputation. Not all payday loans share the same terms, but most have ruinous charges attached to them, high interest and strict repayment stipulations. As a result, even minimal initial borrowing can spiral to become a significant debt problem.

So why do they remain so attractive to ordinary borrowers? The answer is simple. They’re marketed well, are incredibly easy to apply for, and seem like an ideal solution for those who are only struggling short-term. Don’t be fooled, however; payday loans are unsuitable for the majority of people.

This advice is easy to give, but perhaps not so easy to heed. For those in need of money in the short-term, it creates a significant problem: a shortage of funds and no immediate remedy. Luckily, payday loans are not the only interim borrowing option available to you. Here are just a few alternatives to consider…


Most bank accounts will offer an attached overdraft facility, and these can provide a brilliant alternative to payday loans. On average, your overdraft will allow you to borrow between £500 and £5,000, with no set date on when this amount must be repaid. Although some banks will charge interest on certain accounts, this is likely to be significantly lower than payday loan options, and charges will only arise if your borrowing exceeds the set amount.

Credit Cards

For those that have already maxed out their overdraft, credit cards can also offer a viable solution for short-term borrowing problems. Most credit cards will allow you to borrow between £500 and £5,000 at a time, and although you’ll pay more interest than you would on an overdraft, this sum will be significantly less than if you borrowed from a payday lender. As an added boon, credit cards can be a great way to build a positive credit history, provided that you meet your repayment terms.

Specialist Short-Term Loans

Some people, such as students, may also find that they qualify for specialist short-term loans from companies such as Smart-Pig. These alternatives allow you to borrow money quickly and easily, like payday options, yet they provide much more attractive terms, including features like grace periods, capped interest rates and ‘no rollover’ pledges.


Another very old but still useful borrowing option is pawnbroking. Pawnbrokers carry out very little in the way of background or credit checks, making them well suited to those with a poor credit history, but still provide quick and easy access to capital. In exchange, you’re required to hand over as an asset as surety, which is returned to you when the money you borrow has been paid back.

If you’re considering a payday loan, could one of these options be a suitable alternative for you?

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