Options Available When a Financial Emergency Strikes
Throughout life, there will be moments where we need to access funds that we may not have. This is considered a financial emergency, and it’s important to know what your options are when this happens. Here is a list of the many ways you can access money in a financial emergency.
1. Borrow from friends or family
If you have no other choice but to borrow money, start by asking around. Maybe a family member or good friend will lend you a hand on the situation. Don’t expect them to give you money without expecting something from you in return, though. They may even ask you for collateral if they can’t trust your ability to pay back the loan fast.
2. Put it on your credit card
If you have a credit card you can use, it may be able to help you in your time of need. If you’re not afraid to add another bill to your already-full stretching wallet then this might be a good option for you. Make sure to pay off the minimum balance before the due date or else may get charged late fees, but as usual it’s better to pay off the balance in full each month.
One benefit of using credit cards is reward points. The different types of rewards are paid out once the credit card company settles your bill. Every time you use your credit card, you will earn points and the more you use it, the better the rewards become.
3. Get a cash advance
If you need money fast then perhaps a cash advance is the way to go. Cash advances are usually very expensive in terms of interest, however. This can be a good option when it’s really needed but it’s better to use another method unless you are desperate.
4. Use your bank account overdraft
If you have an account with an arranged overdraft, it’s possible to get money from it if the amount is insufficient. Overdrafting can be dangerous so use your best judgment if you want to go this route. Some banks charge fees for this service and others do not. You should do some research about your own bank’s overdraft policies though before committing to this option.
5. Only consider a payday loan as a last resort
If you need money now and it’s not at all possible to find a decent alternative, then a payday loan is something you might want to consider as a last resort. Payday loans have exorbitant interest rates, and some borrowers have trouble paying off their loans every month. However, if you are in serious trouble maybe they are the option to get you out of a tricky situation.
An alternative to this could a quick loan from a reputable lender or broker. All lenders in the UK must be authorised and regulated by the FCA, so look for the authorisation details before deciding to apply. Short term loans are usually better than payday loans in terms of regulation and interest rates, but they do carry similar risks and high interest fees if not paid back on time.
Just make sure that high cost borrowing is an occasional situation and not a regular thing.
Life is full of uncertainty but it’s always best to be prepared for the worst, so you don’t have to worry about it as much. The list above is not exhaustive, but it covers many of the possible ways you can access money when a financial emergency strikes. You should know that emergency situations are only temporary and there are always ways out of them.
Photo by Edward Jenner from Pexels