Emergencies: Dipping Into Savings Vs. Getting a Payday Loan

You will never know when you or someone you love will get into an accident, be hospitalized, or encounter some other situation where immediate cash is needed. These emergencies will eat into your savings and could potentially put you in a financial bind.

Some people are stuck deciding between dipping into their savings or getting a loan to tide them over during an emergency.

What are the pros and cons of using your savings versus getting a loan for an emergency?

Dipping Into Your Savings
Using your savings to pay for emergencies helps you avoid getting into debt. All you need to worry about is paying for hospital bills or other relevant expenses. You don’t have to worry about applying for a loan, the prospect of getting rejected, and having to pay back the funds at some point in the future.

Once you use your savings for an emergency, it is going to take more time to recover it, as you have to pay for everything in one go. You will have fewer options if you use your savings, as you will be cash-strapped for a while. Also, you may end up living paycheque-to-paycheque as you rebuild your finances.

Getting a Payday Loan
Other than using your savings, you have the option to apply for and get a payday loan to pay for emergencies.

A payday loan gives you financial flexibility during times of financial distress. Use the money to tide you over during emergencies without dipping into your savings, if available.

The flexibility of having cash when you need it most enables you to save money while paying for emergency bills. Make sure you understand the repayment payment terms with your creditor before signing your loan agreement. Online payday loan services like GoDay allow you to borrow a flexible amount from as little as $100 to as much as $1500 for existing clients.

The downside to getting a loan to pay for emergencies is that you have to pay for interest rates on top of the bills you incurred. Given the urgency of the need and the quick cash out, it really is worth the interest.

These are some of the considerations you need to make when you choose to either use your savings or get a payday loan to pay for emergencies. Weigh the pros and cons of each one before making a decision. Assess your finances and determine if getting a payday loan is your best option or using your own money.