My Alternatives
Occasionally, a journalist or consumer rights activist will have a “revelation” and decide to share their thoughts on all of the great alternatives there are to payday loans. These alternatives are supposed to be comparable or more preferable to taking out payday loans. Perhaps this question is in rhetoric…but, if these alternatives are so great then why is the demand for payday loans so high? There are a handful of alternatives to payday loans but they’re hardly comparable.
The most common advice that I’ve seen blogged about and suggested is to appeal to your friends and family. I’m sure that this is an options for some but may not be a consideration for others for a number of reasons. Primarily, asking a friend or family member for a loan can be a recipe for disaster. Personal finances are just that…personal and confidential. If I am a private person, I certainly would not be comfortable doing such. If I’m unable to pay the loan back within the time frame agreed upon then there is a risk of straining, damaging or destroying that personal relationship. Or, perhaps the person who was gracious enough to loan the money also feels as though they now have the right to give input into how my finances are run. I certainly wouldn’t want my finances to become the burden of a friend or relative in any capacity.
Another alternative that I’ve been hearing more frequently are credit union loans. However, if I’m not already a member of a credit union it’s not an option for me at all. Or maybe I need the money immediately. My credit may not be the best because I’ve just had a rough couple of months or years. This option is only useful if 1)my credit is still decent 2)I have an active account at a credit union 3)I don’t necessarily need the money immediately and 4)I don’t mind opening a savings account at that institution. It doesn’t sound very convenient if all of the above conditions have to apply for it to be an option for me.
Here’s an alternative that I heard for the first time today. Get a part-time job or a second job in lieu of taking out a payday loan. Yes, because finding a part-time job in an economy where the unemployment rate is near 10% is a piece of cake. Yes, I’m being facetious. It’s even less likely to happen if you’re a single parent or if you’re also in school. How are you to find someone to care for your children 12-16 hours a day or find the time to work a second job if you have numerous other responsibilities? In theory a part time job is a good idea if I’m perpetually cash strapped but not an option for urgent matters and emergencies.
Credit card cash advances are also assumed to be preferable to payday loans but like a payday loan, it has to be something that’s used in moderation and used responsibly in order to be beneficial. It would be absurd to take out a $500 credit card advance and make the minimum payment on it for 6 years at a higher APY. A credit card advance should be paid off as soon as possible just as a payday loan should be paid off immediately.
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