Short term cash flow solutions

Tuesday, 14/07/2015

We've all been there; either the car has broken down, there's a bill to be paid or you forgot about that birthday present. Whatever the situation, it's not pay day for another week or so and you simply don't have the cash to cover that unexpected or forgotten about expense.

At times like these, what is the best option to help tide you over until you next get paid? You have a number of options depending on what your expense is. You could pop it on a credit card or a store card, you could take out a payday loan, or you could borrow from friends or family.

The cheapest option is definitely to borrow interest free from friends or family. However, not everyone likes doing this, and quite simply it isn't always an option. You could put it on your credit card or store card, but it can be quite tempting not to pay off the full amount when you get paid, opting for the minimum monthly payment instead. This means that your balance can start to creep up. So, if you do put it on your credit card or store card, promise yourself you will pay it off in full as soon as you get paid.

If you don't have a credit card, or don't have enough balance on it, the other option is a payday loan. A few years ago payday loans had quite a shady reputation, but recently they've really turned themselves around and many people see them as an affordable, viable option for short term cash flow issues.

Last year, The Financial Conduct Authority (FCA) capped payday loan rates at a daily rate of 0.8% of the borrowed amount. When this legislation was introduced, most of the less reputable payday lenders closed down, leaving more considerate, responsible lenders to provide this important service. This action has certainly gone a long way in providing consumers with a renewed confidence in payday loans. Additionally, the added benefit of options such as same day loans and paying back through installments make this an even more attractive solution.


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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk