How to avoid falling short of money in an emergency

How to avoid falling short of money in an emergency

It can be disastrous when you need money instantly but don’t have it. Simply coming up with £2,000 in the current market situation can be quite challenging. But what if we were to convince you that you could have that money at your disposal?

You can always say that you have your house deposit or holiday funds ready. But do they have a substantial rate of interest with which you can be comfortable? If you were to take a loan, how much interest would you be paying? It can be quite a lot. You can always spend £2,000 from your fund and set aside £200 a month, and by Christmas the following year, everything will be repaid and collecting interest.

It is always wise to save money for those rainy days. You never know when you might need money under the prevailing market conditions. You can lose your job or face a medical emergency. You need to save enough money to last at least six months. Once the emergency is over, you can start saving again.

Credit card

You can always opt for a zero-percent purchase card. Yes, there are credit cards like that. You can always use them in an emergency. No interest is paid on purchases up to your credit limit with these cards, as stated on the back of the card.

However, there’s a catch: after the fixed period, you need to pay a standard average of 26% a year. Depending on your credit record, the length of that period may vary. It can even be less than 25 months if you have a poor credit record.

Personal loan

Getting a loan from a bank can be ideal, but you must understand that the rate of interest is forever increasing. A loan of £2,000 will ideally have the best interest rate of 12%. However, the duration of the loan would be two years. The larger the loan amount, the longer the payment years and the lower the interest charged. Banks also consider your credit rating before disbursing the loan amount.

Credit union

One of the easiest ways to borrow money is from a local credit union. These financial institutions are there to help the locals and offer loans with a maximum APR of 3%. They may even charge as little as 1% per month. These organizations are not-for-profit communities, and their sole existence is to help those who are in dire need of money. 

Additional methods to borrow

You can always use your normal credit card, which charges 26% APR. Before paying off a cent of a $1,000 loan, you must first pay $260 in interest per year. Typically, a 39.9% overdraft occurs. Never use Google to search for a loan since you’ll find replacement payday lenders that will charge hundreds or even thousands of pounds for a short-term loan. They should be avoided at all costs. The only thing you need to keep in mind concerning APR is that low is ideal; the lower it is, the cheaper the loan will be for you.

- Published By Team Timeswire

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