Payday loans are frequently suggested as a fast solution for a bad financial situation, allowing you to bridge the gap between running out of money and your next paycheck arriving. The basic idea is that you can borrow a small sum of a few hundred dollars for a short period of a week or two, and repay the debt next time you get paid.

This sort of facility can indeed be quite appropriate if you’ve run out of money for day to day living expenses, or if you’re faced with an unanticipated bill or expense that you simply can’t pay when you need to, but are pay day loans always the good choice they’re promoted as?

First, we’ll examine the incontestable advantages of these loans, before looking at the disadvantages, and possible alternatives you may be able to use if you decide a fast cash loan isn’t right for you.

The lending standards for payday loans are really quite lax, and nearly anyone who’s got a job and has a suitable bank account will in all likelihood have their application approved. This means that even people with poor credit histories should be able to get a payday loan, despite being rejected for nearly any other type of finance.

They are also easy to sort out, and you can often get the money in your account in a matter of days. Some payday loan companies can even arrange an overnight transfer of the loan straight into your account the very next day, which is obviously very useful when you need cash in a hurry.

Finally, once you’ve been approved for your initial loan, it’s usually a very easy matter to ‘renew’ your loan again if you find you need to make use of the facility if funds are again short in the future.

There are, all the same, two substantial disadvantages to pay day loans which you rarely come across in the ads and web sites furthering them. Firstly, they’re really pricy in comparison to other forms of finance. Because the term of the loan is so short, a fee of 20% of the amount you borrow – which is about standard – will work out to be an extremely high APR.

The second problem is closely related: because they’re so expensive, you can easily be left without enough cash the next month once you’ve repaid the loan and paid the interest. In this scenario, it’s just too easy to renew your loan again to cover the shortage, resulting in more fees, and a neverending cycle of borrowing.

Therefore, if you resolve that a payday loan isn’t a good choice for you, what choices do you have? The first one is borrowing on a credit card, if you have one. While credit cards are normally also pretty expensive forms of credit, they do allow you to extend the debt over a number of months rather than needing to be payed back immediately along with a fee.

Most banks now offer an overdraft facility, which can also be used to tide you over a short term lack of money. The interest rate on an agreed overdraft is likely to be more favourable than that of a credit card, but your bank might not extend you the facility. Be careful about going ahead and overdrawing without your bank’s authorisation, as the charges they will impose in this case will be very expensive.

If none of these options is available to you, and you have no other way of acquiring money such as borrowing off family, then a payday loan may be the better choice. Just be sure that you use it cautiously, and paying attention to the warning it’s giving you about the longer term health of your finances.