You’ve probably seen a number of recent television commercials advertising quick and easy payday loans as a way to urgent financial need. Although it’s true that payday loans are a highly effective way to raise some quick cash, it’s crucial to remember that it’s not usually a good idea to take out a payday loan to pay off long-term or revolving debts.
Generally speaking, payday loans should only be taken out for financial emergencies, or for times when payment of a debt is absolutely imperative.
Before taking out a payday loan, here are a few things to consider:

  • High interest rates: No matter how much or how little money you borrow, a payday loan is typically going to carry higher interest fees than other types of loans. One reason for this is that lenders carry a higher risk with payday loans. By not asking for other forms of collateral or security, lenders leave themselves more open to borrowers defaulting on the loan.
  • Processing fees: Payday loans sometimes carry higher processing and administrative fees, so you’ll need to be prepared to pay these off, in addition to the original loan amount and the interest it accrues.

When are payday loans a good idea?
There are a number of situations where taking out a payday loan can be an effective tool in straightening out your finances:

  • Emergencies: If you need to get a car fixed, or you have emergency medical care and you can’t negotiate terms with the billing office, then a payday loan is an effective way to raise quick cash.
  • Rent: Because rent payments are usually not negotiable, payday loans can be an excellent way to raise rent money when you simply don’t have it.
  • Debts: If it’s imperative that you put at least a small amount of money toward certain debts and you don’t have any disposable income available, then a payday loan may help you out of this crisis. Before taking out a loan, however, it’s important to see if you can negotiate the debt or ask for an extension.

When are payday loans not a good idea?
Typically, it may be better to consider other options for the following:

  • Paying utility bills: Unless you’ve been chronically late, utility companies will often give you extended deadlines on your payments.
  • Revolving charge card debt: Credit card companies are usually open to working with you on your payments. Likewise, you can also use a credit counseling service to help you negotiate lower minimum payments.
  • Medical expenses: Most hospitals, clinics and doctor’s offices will work with you on a payment plan, so check with the billing office before taking out a loan to pay off your bill.

If you’ve considered all your options and you still feel that it’s necessary to take out a payday loan, then researching rates at sites such as will help you get the best deal for your money.