The benefits of an Overdraft compared to Payday Loans
An Overdraft, in effect is a credit agreement with yourself and your bank/building society which allows you to spend more money than you actually have in order to cover short term finances. Overdrafts have recently become a popular choice for many individuals who have a lower bank balance than normal, the overdraft acts as a sort of financial cushion should unexpected finances be debited from your account.
Payday loans are another popular choice in order to cover short term finances and any one off unexpected bills such as car repairs, home improvements and provide a bit more of financial flexibility of your bank account.
In comparison to payday loans, an overdraft facility provided by your bank will work out a lot cheaper, however not everyone is entitled to one or will find it easy getting the bank to agree to providing an overdraft. An application will need to be made to your bank who will then assess your previous bank balance and account history to decide whether an overdraft would be the best approach for you, the whole process can potentially take a full week.
In many cases banks will reject the application, mainly if an individual is consistently overdrawn or already operating in a current overdraft facility. Should this be the case banks will usually suggest another form of finance in order to cover the unexpected finances that you are facing such as short term loans
The benefit of taking out a payday loan is that they are ideal to cover emergency finances due to their instant approvals and very fast cash transfers which in comparison to the lengthy approval process that exists at many banks makes them a highly favorable choice.
Although overdrafts are the cheaper option for many individuals the time it takes to have your application approved proves costly to those facing emergency outgoings and unexpected bills which is why payday loans remain a very popular choice with UK consumers.