There is without question a great deal of controversy surrounding the subject of payday advances in the UK. Payday loans allow individuals to receive cash rapidly when they need it to cover the cost of an urgent situation or simply to have a little extra money to spend. Many times, payday loans are favorable to bank loans because they may be acquired quickly and without a credit check. People who are unable to receive credit elsewhere often have few other option but to turn to payday loan shops and websites to receive the cash they want to tide them over until their next paycheck.

The arguments regarding payday loans all stem from the fact that payday loan repayment fees may become pricey. Most companies charge a fee of 25% for each £100 which can be borrowed. This could seem like a reasonable amount for small loans but individuals who borrow £1000 or over and people that have trouble repaying their loan on time in many cases are faced with interest rates and fees equivalent to over 3,000% per annum. Payday loans could be very dangerous if they aren’t used responsibly and repaid quickly.

New information suggests, however, that payday loans may not be as dangerous as was previously thought. On many occasions, payday loan repayments fees are actually found to be significantly less than the fees charged by banks for unauthorized overdrafts. Each time a bank account is overdrawn for any period of time, interest and fees can stack up to a total in the hundreds, but payday loans help individuals to avoid these problems. Payday loans are usually given out for the 10-14 day period at the end of which the loan must be repaid along with the repayment fee. Those who take out payday loans know beforehand just how much they should expect in fees, but bank fees can catch customers off-guard.

You can find pluses and minuses to each side of the argument, but the safest option is to do some research if you need a little bit of supplemental income. Contact a payday loan shop or visit a payday loans website to see the amount you would be required to pay back on your payday loan and compare it to the amount your bank would charge for an overdraft to the same amount. Each bank will charge another fee and several banks may not be able to give you a precise estimate but when you have done your research you should be able to compare your options and make the selection that is right for you.

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