Payday Loans
What is a Payday Loan?
A payday loan is a short term financial solution to cover an unexpected cash flow need.
21st Century consumers use a range of financial products to assist with their monetary needs and many budget well to do so. However, we understand that there are times when small amounts of additional cash are needed, whether to cover unexpected bills or to take advantage of an exciting offer for a holiday. Payday loans are designed to cover these short term needs without incurring an assortment of bank charges or bouncing cheques and direct debits.
A payday loan enables you to avoid all these hidden charges and pay back the loan in one easy payment. You borrow, you pay back on payday, the loan is finished with. It is as simple as that.
Taking out a payday loan provides top up on your finances until payday.
What it isn’t…
A payday loan is not a long term solution to ongoing financial problems. We strongly recommend against using this product to help pay for regular credit commitments.
In the case where you feel you have debt problems which you feel can not be solved by you individually, we recommend you contact the Consumer Credit Counselling Service, a charity dedicated to providing confidential, free counselling and money management assistance to financially distressed families and individuals or visit www.cccs.co.uk.
Typical APR 1355% (fixed)
Something to think about:
Example 1: Bank One's charge for making a debit card payment with insufficient funds in the account is £20:
In February 2005 a Month End Money customer made 12 payments
totalling £96.50 using her debit card whilst overdrawn
and was charged £240 (£20 x 12 payments) by Bank One.
The £100 loan she used the following month from Month End Money
to help her meet her financial commitments cost her just £25
in charges.
Example 2: Bank Two's charge for not clearing a cheque is £35. The following text is the complete body text of a letter sent by Bank Two to a Month End Money customer on 11 May 2005:
We haven't been able to pay the item(s) shown below because there wasn't enough money in your account
To cover our costs, we make a charge of £35 (maximum 3 charges per day) for any item we can't pay. We will take
this money from your account seven days from the date of this letter. If this causes you to have an unauthorised
overdraft, we will also charge you interest at the unauthorised rate and a monthly unauthorised overdraft fee of £28.
However, if your unauthorised overdraft is 30 or less the unauthorised overdraft charge will not be applied.
We appreciate that nobody likes paying charges and we'd like to help you avoid them in future. We've provided an online
banking service that allows you to view an up to date statement of your account, details of your standing orders and direct
debits and much more.
Should you wish to discuss your borrowing needs, you can make an appointment by visiting any branch.
Where we haven't paid a cheque or standing order, please don't forget to make other arrangements for this payment.
If the failed payment is a direct debit, you'll need to contact the collecting organisation to see when they'll try to collect
the money again.
Example 3: Bank Three's charge for allowing a direct debit to be attempted with insufficient funds in the account is £32:
In January 2005 a Month End Money customer had a direct
debit fail. The company to whom the direct debit was payable
tried to take the money again 7 days later. Both times, there
were insufficient funds in the account, so Bank Three refused
to pay the direct debit and charged the customer £32 for each time the transaction failed -
£64 in total!
In this case, the client paid £64 but did not actually
borrow any money, because Bank Three did not make the payment.
The following month the customer used Month End Money
to borrow £200 which allowed to direct debit to be
made, costing only £50 in charges.
Consider also if the direct debit had been for a utility bill
and as a consequence of the payment not being made, the customer
lost service. Typical re-connection costs for electricity
or phone begin at £30.
Incidentally, in case this is not bad enough, in the same
month, Bank Three also charged the client £80 for
4 unpaid debit card transactions, as in Example 1, for a total
of £25.56, making the total charges for the month £144
plus the cost of an unpaid Direct Debit.
