However, recent research by the consumer group, Which? has identified that in many cases, borrowing from the High Street banks can be more expensive than taking out a payday or short-term loan.
The report from Which? said “Borrowing £100 for 31 days will cost £30 with a Halifax authorised overdraft or £20 with some Santander accounts, and borrowing the same amount for the same time with a payday loan company costs between £20 and £37.”
Unauthorised overdrafts are even more costly. “With the Halifax Reward current account and the Santander Everyday Account it can cost £100 in charges for going £100 into an unauthorised overdraft for a month.”
Even the least-expensive unauthorised overdrafts from high street banks charge between £5 and £6 per day. Borrowing £100 from MYJAR for 18 days will cost you just £1.11 per day.
According to Which?, the ability to remain in an unauthorised overdraft for weeks at a time, means that customers of High Street banks can incur “sky-high default charges”.
We can understand how customers can fall into the trap of getting into unmanageable overdraft charges. In many cases, these charges are difficult to understand and the details seem to be hidden in the small print.
At MYJAR we always want to be fair. We want our customers to understand the deal. We keep our loans simple.
Every time our customers borrow from us, we provide clear information showing how much they will have to repay, when the payment is due and how much the charges are. We even send a text to customers a few days before repayments are due to make sure that they have enough money to pay their loan on time.
A lot of people wrongly assume that people who take out payday loans are being financially naive. The findings from Which? prove that taking out a short term loan can often be a far more financially savvy option.
Ask yourself – “Does my bank send me the information I need to understand exactly how much it will cost me to borrow, every time I borrow?”
This article was brought to you by MYJAR. We're an award-winning direct lender, committed to providing clear, simple and responsible loans when our customers need us. If you need some assistance to meet an urgent financial requirement on either a short or long term basis, APPLY NOW for one of our loans.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk