Overdrafts no longer an option? Where to turn next

Many people use bank overdrafts for the purpose it was intended: to close the gap between when money is coming in and when bills are due. However, in tough economic times, many find themselves with an unwanted debt resulting from overdraft balances that are never repaid. The interest rates associated with bank overdrafts can be quite steep. When banks started tightening their lending requirements and restructuring their lending practices, one type of credit that got prohibitively expensive was the bank overdraft. Typically, a fee to use overdraft funds will likely be charged and then any outstanding balance will be charged interest. When the bank overdraft privileges you depend on get too expensive, where can you turn?

Credit card cash advances
While the interest rates on credit card advances may be exorbitant, if you intend to use the money for a very short time, you will only be charged the interest over the period you borrow. You may be charged a fee for each time you use it, but you may use it fewer times than you might an overdraft.

Payday loans
One type of financing that has gotten more popular in these tough economic times is the payday loan. Payday loans are based on your next paycheck and are automatically deducted from your bank account on payday. The loan is intended to be short term and one time. Be aware that when the interest rate is quoted for the short term loan, it is not quoted as per annum. Different to credit cards, which may charge 30% per annum for outstanding balances, a payday loan charges you a one-time fee of 25% of the loan. Should you need to delay repayment the per annum rates could be significantly over 1000%.

Home equity lines of credit
Home equity loans can be a great way to have access to cash when you need it. Like your checking account overdraft balance, when you pay it back it is available to you again. However these rates will be significantly lower than your bank overdraft rate, credit card cash advance rate and, certainly, payday loan.
No matter which solution you choose, be sure to check all the terms. The best of all solutions is one that eventually leads you to overall debt reduction and financially sound debt management.