When it comes to looking at your personal finances, there is no getting away from the fact that some debts seem more damaging than others. There needs to be an acceptance that payday loans cause problems for people and that they should be avoided at all costs. However, a recent study published by Which? indicates that overdrafts can also be very damaging for most people. This means you should be carefully examining your finances before you rush into deciding what is best for your needs. Knowing that overdrafts can be damaging is a good starting point in controlling your finances.

It is found that some people are paying more money dealing with an unarranged overdraft taken from their bank than they would do it if they took out a payday loan. New rules mean that anyone borrowing £100 for a period of 28 days from a payday lender will now face maximum charges of £22.40. However, if you are overdrawn from your bank without permission, you may end up paying as much as £90.

Banks will tell you that an unscheduled overdraft is a last resort and that they can provide you with more attractive ways to borrow money. However, given the time it takes for many banks to provide finance and the fact that a lot of bills can come out of nowhere, it is no surprise that this is a situation that many people find concerning. There needs to be consideration of the costs associated with loans and if you are looking to make the most of your finances, be aware of what you may have to pay.

Be aware that overdrafts can be damaging

This isn’t a post that suggest payday loans are of benefit or should be considered as a financial option but it is important to know what charges you may face. The financial market moves a lot and this means that the offer that was worse for you some time ago may not be the worst option for you now. This means you need to consider all of your options be they overdrafts, payday loans or even guarantor loans, which can offer you a much more attractive rate of APR.

If you always thought that overdrafts were a safe and affordable way to have some extra money on hand, make sure that you can stay within your agreed limits. A failure to do so could see you paying a lot of additional money, which no one wants to do. Overdrafts can be a good option but if they are mistreated, they can cause a lot of problems.