Try These 5 Alternatives to Payday Loans

In last week’s blog, “5 Reasons to Avoid Payday Loans,” we discussed how dangerous payday lending can be to one’s financial well-being. With triple-digit interest rates, hidden fees and predatory collection practices, payday lending is not a method that you should turn to in the event that you need to make up for a lack of cash because it will ultimately keep you from being able to get ahead financially in the long run.

So if you shouldn’t use payday loans and payday lenders, then what should you do? There are alternatives to payday loans that won’t leave you trying to pay back more money than you borrowed in the first place and that can help take care of your immediate needs for money. Consider these alternatives to payday loans the next time you find yourself in a financial pinch.

  • Seek a small loan from a bank or credit union. More and more banks specifically wanting to give customers alternatives to payday loans are offering small loans that are safer than the ones you would obtain via a payday lender.
  • Sell some belongings or pick up a quick side job. If you need some fast cash, consider having a yard sale, selling electronics or furniture online or even taking some clothing to a consignment shop. You could also look for quick opportunities to make money such as babysitting, yardwork and other odd jobs.
  • If you have to, use credit cards over payday loans. While we do not advise racking up credit card debt, if you truly have an emergency expense and do not have the cash to cover it, a credit card is a better alternative to a payday loan because interest rates are much, much lower on credit cards.
  • Make a budget and stick to it. This is more of a preventative measure, but it can help you avoid being in the position in which you are inclined to use a payday lender in the first place. If you consistently find yourself in these types of situations, then you may need to look at where you can lower expenses and tighten your budget.
  • Build an emergency fund. Having an emergency fund is critical in the event that unexpected expenses come up that you have to cover. Many people who use payday loans do so because an unexpected occurrence like a health issue, car problem or home repair caused them to need cash that they didn’t have.
  • Get overdraft protection. If you already have a payday loan, this can help you avoid overdraft fees that may occur if the payday loan company automatically withdraws money that you owe from your account without giving prior notice.

Payday lending can put you in a vicious cycle that is difficult to get out of. Known as “predatory lending,” the industry purposely targets people with limited income who will be likely to have to keep coming back just to pay off previous loans. If you are struggling with payday loans or are having a hard time managing your finances in general, our Bank On South Alabama community and financial partners can help. Visit us at to learn more.