Whether it’s for school materials, an emergency trip to the dentist, or a replacement tyre for the family car, sooner or later, we all get caught short. Usually at the worst time.
In these situations, a credit card can be very handy. They’re a convenient way to cover a temporary shortfall in funds, when and where you need it.
However, credit cards do have their downsides. Particularly when it comes to using them too much. Even with a modest limit, it can be easy to rack up a large debt.
So, what are the alternatives? Can you ditch the credit cards and still have options in an emergency? Yes, you can. Here are five such options to choose from.
1. Personal overdrafts
A personal overdraft allows you to overdraw your bank account up to a chosen amount.
It’s a safety net for when what you’ve budgeted for isn’t quite enough. If you find yourself $100 or $200 short you simply overdraw the amount and repay it over the coming weeks.
Like a credit card, you are charged interest on the amount which you overdraw. There may also be a monthly fee for taking advantage of this service.
Yet, unlike a credit card, personal overdrafts are designed purely for emergencies. So, there isn’t the temptation to use them every day, like with a credit card.
2. Rainy day accounts
This isn’t going to be an option for everyone. Between childcare costs, nappies, and doctor’s check-ups many Mums are working hard just to break even.
Still, if do have the capacity to put a little away once a week, it can be a real help for handling unexpected expenses when they occur.
A rainy day account is simply an account you open and then contribute small amounts to on a regular basis. So, when emergencies happen, you have a little extra.
Even as little as $10 a week can, over time, add up to a handy backup.
3. Short term cash loans
A cash loan specialist can give you access to funds quickly and conveniently. Approval and transfer can take just a couple of hours. And applications are usually completed online or over the phone.
Unlike a credit card, these loans do not charge interest. They instead charge two fees; an establishment fee and a monthly fee for each month of the loan.
This type of loan is more expensive than other options. However, the trade-off is that you get the funds quickly and with a minimum of effort required.
4. Borrowing from family
Borrowing money from family or close friends can be a bit of a catch 22.
In many cases, this is the cheapest way of getting additional funds. After all, most parents or siblings tend not to charge their relatives interest or fees.
That said, money can often be a controversial topic among families. It can also result in considerable heartache if things go wrong. And, the last thing you want is a falling-out over money; family is worth more than that.
So, if this is an avenue which is available to you, tread carefully. It can be an effective solution, provided you take the appropriate precautions.
5. Centrelink advance payments
If you are receiving Centrelink parenting benefits, then you may be eligible for an advance on your payments to cover a temporary shortfall in cash.
Repayments on your advance are made fortnightly via a reduction in your regular payments.
So, it will be important to factor that into your budget.
Arranging this type of loan can be difficult. Anyone who has dealt with Centrelink in the past will know that there can be waiting periods and a fair amount of paperwork.
However, once arranged, these are one of the lowest cost options available.
ABOUT THE EXPERT
Club Money are cash loan specialists who provide fast emergency cash loans to get you through the tough times.