Ever since cash till payday loans were introduced to the UK market in 2006, they have attracted controversy.  If you read and believe the headlines, these types of loans exploit people who are vulnerable and it results in them acquiring insurmountable debt.  Whilst this may be true of a very small percentage of the payday loan market, there is in fact another side to the argument which illustrates that they are helpful, innovative loans which are not only very useful, but also cheaper than alternative types of loans.

This case study will look at an individual ‘Peter’ who wants to borrow £100 at the cheapest possible rate.  Peter wants to look into the different short term borrowing options that are available to him.  There are four realistic options, payday loans, an authorized bank overdraft, an unauthorized bank overdraft and a credit card.  To determine how much it will cost Peter to borrow £100 from each of these lenders, he needs to calculate the following:

• The interest rate against the loan of £100.
• The length of time he will repay the loan – one week for this example.
• Any additional hidden charges.
• The total cost of borrowing and repaying the loan of £100.

Payday Loans

• The average APR of a payday loan is 1737%.
• Payday loan terms mean that Peter must repay the loan within 30 days.
• This means that to borrow £100 would cost Peter £25 to repay at this level of APR.
• The total cost of the loan is £125.
• Some payday lenders charge for additional services, however there is enough competition in this industry that Peter can choose a lender with no additional charges.

Bank Overdraft – Unauthorised

Bank overdrafts can either be authorised or unauthorised.  Authorised overdrafts are pre agreed, for example a student overdraft of £1500 and unauthorised overdrafts are when you have not pre-arranged to borrow that amount of money from your bank i.e. if you go over the agreed limit.

Unauthorised bank overdrafts must be repaid asap i.e. one week.The average amount of money charged per week for an unauthorised overdraft is between £22 and £186 per month, an average of £104. The total cost of the loan would be £204.

Bank Overdraft – Authorised

• The cost of authorised bank overdrafts is anything between 9.9% and 19.9% APR.  The average of this is 14.9%.
• Authorised bank overdrafts can be repaid whenever Peter decides to make the repayment as he has agreed this with his bank.
• The average amount of money charged per week for an a £100 overdraft is £14.90.
• The total cost of the loan would be £114.90.

Credit Card

• The average APR of a credit card is 16.9%.
• The amount of money charged for the £100 loan is £16.90.
• The total cost of the loan would be £116.90.

Let’s look at the findings versus the rumours. Payday loans are in fact a cheaper source of borrowing £100 than an unauthorised bank overdraft.  There is also a very small difference in price of borrowing £100 from a payday loan than from a credit card.  Therefore these loans are not going to bankrupt someone who uses them properly and in some instances they actually a cheaper source of loan.  Please note that this example is based on making a full repayment including interest within a period of one week. If this was not adhered to then the cost of all the examples would increase.

Credit cards are often misused, and as a result of this misuse lass warned that financial planners find themselves in more trouble with credit cards than they had expected.By following these top 10 tips, you will find yourself in less trouble in the end, and save you money. The fundamental thing to remember is that credit cards are only short term solution, and should never be used to provide finance in the long term. Many people forget to apply this rule, and ultimately find themselves in trouble later.

1. Think about how you use your credit card. Do you intend to clear the balance at the end of the month, or will you not be able to pay for two months?

2. Calculate the total expenses you are likely to engage in a year, using the formula of suppliers in a project, your chances of repayment and borrowing requirements. Now the work on what is cheapest.

3. Consider working with a larger company, which is governed by the appropriate bodies and the safest option, work with a company which is a listed company or one that is owned by a listed company.

4. Protect your account at any price, and make sure you are careful about the companies that contract with you. If in doubt, pay cash or go elsewhere.

5. Shopping online? Look for companies that use a third party payment service provider? Pay Pal? Or? World Pay. Always make sure that when you meet a payment, the address bar reads https: / / instead of http://. This means that data is encrypted.

6. Only carry credit cards with you that you intend to use. If you carry too many then you just asking for trouble, because you need more time to notice when they fail.

7. Keep all receipts and keep a note of all transactions by credit card you have been involved. If you are still in doubt about a transaction with your credit card provider immediately.

8. Always check your statements in detail, and try to do as often as possible. The longer you wait, the less you will retain transactions, and the less time you have to do something.

9. Never use your credit card as a way to finance purchases that you’re not sure you’ll be able to afford in the near future. If you have a job, for example, that ends in two months, then make sure that your credit card balance will be zero for that period. This will eliminate the risk of not being able to keep up the repayments, if your contract is not renewed or if you will not be able to get a new job.

10. Remember you can always churn. Always keep abreast of market prices, and Dont be afraid to go to vendors for better prices, which can often be the best way to ensure that you save the most money.

When you decide to Open a basic bank account it is sending a message to yourself that you are now in savings mode. This little change of attitude can make a big difference in how much you are able to save every month. Making savings a priority soon sends the message to your brain to stop spending money out of habit.

Here Are Some Things To Do To Get Into The Savings Habit

One of the easiest ways to start saving is to set yourself a goal or a target to aim for. You may even decide to save the money for a specific item such as a vacation. The point is that it is never too late to get started and many people are surprised how the motivation of having a savings goal to strive for can make all the difference to their savings habits. When you open a basic bank account you are getting off to a great start. One of the key things that most financial advisers agree on is that it is important to have enough saved to live on for six months if an individual should lose their job. This is a good cushion to aim for before deciding on saving for anything else. The motivation of keeping a roof over their head is usually enough to get most people saving.

Many banks allow you to set up a direct debit or standing order every month. This means that money transfers directly from a current account into a savings account. When this is set up to happen automatically most people do not even notice that there is less money in their current account. This is an easy way to get started and even if it is only a small amount, it will soon add up. Choose to eat at home more often and get out of the habit of buying coffee every day. This alone can make a big difference in money saved every month. Then use this money to put into your new savings account.

Decide to pay yourself first and look at it as investing in yourself. This will give you a whole new attitude towards saving money. You are not depriving yourself of luxury items but are merely choosing to put your focus somewhere else. This mindset shift can have a big impact. Opening up a savings account that has a good rate of interest can make a difference in how quickly the money in this account adds up. The bigger the amount in the savings account, the more of a difference a high rate of interest can make. This helps the money to compound and not just the money that is put into the account, but the amount earned through interest can soon give an attractive balance too. This can provide the motivation to keep going and may even make you decide to put a little bit more aside each month.

They also want to be able to charge higher interest rates possible. Interest rates are how lenders make their money. The interest burden is 100% profit for them. Then, of

course, they want to pay as much interest as possible. Borrowers prefer unsecured loans because they do not take risks by putting in place safeguards. They also prefer lower interest rates. Interest rates to transfer a large number of fees and more on borrowed money. The lower interest rate loan less the costs of the borrower. With the recent rise of alternative interest rate a loan guaranteed may not be the best option right now. If interest rates continue to increase, perhaps pushed the owners to pay their debt payments, not to mention if house prices fall. It is hard as a secured loan will generally have a lower interest rate, to be more flexible, you can spread the repayments over a longer period of time and you’ll also be able to borrow more. So the best loan depends on your needs and circumstances.Details of sand guaranteed rate of interest or no collateral are important and should be taken into consideration. These details can be adjusted until the borrower and the lender are met. They can make the difference between a good loan and the best loan for the borrower.The best loans for both borrowers and lenders are loans that the borrower can afford. The bottom line is that if a borrower can afford a loan, so details are not important. The borrower can afford to make payments, so they do and eventually repay their loan as stated in the contract.

So, the best loans are not easy to define. In some situations the best loans may be a loan secured by low interest rates like fast cash, while in other situations the best loan may be an unsecured loan with an interest rate slightly higher. This amounts to a small number of factors. The borrower must be able to offer the loan, they must feel as if they are not risking too much and they should feel comfortable with the loan. The lender really has more control over the situation of a loan, so that each loan is the best loan for them. It is really the borrower must be careful when defining their best loans.

Flood insurance is an important area of insurance that is often underrated. If your home is located in an area prone to the attack of flood, then you would do well to opt for a home flood insurance plan from a popular home insurance company. This has to be done in a bid to protect your home against the damages caused by violent flood.  You might wonder how the quotes of flood insurance are arrived at.  The insurance company takes a number of factors into consideration beforedetermining the quote of your flood insurance.

The factor of safety provided in your home will certainly be taken into consideration by the home insurance company before deciding upon the flood insurance plan that can suit your home.    The company would look into factors such as the construction of door guards, water pipes and valves in your home and ascertain how they could have reduced the damage caused by the flood.  The agent attached to the most reliable home insurance company would do well to educate you about the importance of knowing certain aspects of preventing the excessive damage caused by flooding water.  He would tell you how you should place your appliances like refrigerator and dishwashers in your kitchen.  He would educate you about the way in which doors and windows in your home should have be constructed.

You would never regret your decision of getting in touch with the best home insurance company in order to get an effective flood insurance plan that suits your budget and liking.  You can have an in-depth discussion with the agent to ascertain the possibilities of reducing your flood insurance premium costs so that you will be in a position to provide the best security and protection for your home situated in a flood-prone area.  The most popular home insurance company is indeed known for its impeccable client service and support.