Many people turn to payday loans as a small loan to get to their next pay check. Unfortunately, over 80% of payday loans rollover causing a revolving loan, much like credit cards, but with much larger consequences. These consequences are so large that many jurisdictions are instituting legislation to protect consumers against these predatory and usurious loans.

A Payday Scenario

The lure of the microloan such as payday loans is that it can be used in many situations. In fact over 50% of Americans, British &Australians that used payday loans used them to cover basic living expenses. With loan amounts as small as $100, it’s easy to see why they are attractive. Borrow what you need today and within two weeks you pay it back at your next pay check. This is where the trouble begins. By taking out the initial loan, you are committing yourself to a loop of debt refinancing. The APRs on these loans can run up to 400% and often include exorbitant rollover or administration fees that also get rolled into the high interest fees on the next rollover.


With such a high number of loans rolling over it is clear consumers are getting taken advantage of. Stop the debt cycle by following the easy advice below.

Exhaust Other Options

First, it needs to be expressed that a loan should never cover basic living expenses, because these expenses will always be present. Which means you will constantly need to borrow just in order to live. Instead of getting caught in the loop, it’s time to consider alternate forms of benefits, payments or loans.

Low Income Options

If you are in a low income bracket there are tons of government, non-profit and charitable organisations that can help you with all manner of financial services. From benefit payments from the government to cover housing, food and other basic services to emergency payment help on items like winter fuel costs and heating to medical expenses. As in example, in Australia they have Centrelink(welfare) loan options that have zero to very low interest for important household needs. Most countries have similar government programs for almost every situation for low income families and individuals. Exhausting these sources will help avoid loans you cannot afford to pay back.


Consult a debt and credit counseling service that can advocate on your behalf to negotiate with creditors to reduce your monthly payments to manageable levels.

Middle Income Options

If you are not a low income individual or family, there are still other options. You may just be in a rough patch financially, but consider paring back your expenses for the month. Trim 10% off your grocery bill, take public transit or cycle instead of driving, and cut out all luxury or entertainment expenses for 1-3 months until you can get past the rough patch. Attempt to borrow money from friends or family or consider a consolidation loan to lump your debt into one easy payment. Changing your tax withholding requirements may increase your monthly pay check, gaining more monthly instead of a refund at a future date.

Whichever income bracket you are in, payday loans is a terrible option. Either way, know you rights in regards to repayment schedules for your area by doing a little online research for payday loan companies.

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