Payday Loans Cheaper Than Unauthorised Overdrafts

Hominu

Anthorn wrote: »

That's you but it's not everyone is it.

Of course not, but I think people will agree that most people who use sites such as Wonga are ones with bad money management skills or like to spend more money than they earn and end up with insufficient funds as soon as a bill arrives. These kind of people typically use the excuse of "I'm too busy, I don't have time".

Anthorn

antrobus wrote: »

Which? credit expert Martyn Saville commented: 'For payday loan companies to claim that they're cheaper than unauthorised overdrafts is, in most cases, true. But that's only half the picture: payday loans and unauthorised overdrafts both offer poor value for money and should be avoided wherever possible.

http://www.which.co.uk/news/2011/09/payday-loans-and-bank-overdrafts-compared-266802/

So where does that help people who can't get help from the banks?

In general the banks do get support from the institutions we trust even though we all know that bank charges are exhorbitant when we consider that they can be heaped charge upon charge. That's even more relevant when we consider that any overdraft can be cancelled at will and repayment demanded over the short-term, in most cases less than 60 days.

For example the OFT blew its own trumpet as it reported last month that as a result of its campaign to reduce bank charges bank customers paid £926m less between 2007 and 2011. What it doesn't say is that period also coincided with the rise of pay-day loan companies!

antrobus

Anthorn wrote: »

So where does that help people who can't get help from the banks? ...

I'm guessing that by 'help' you mean 'borrow money'? What are you suggesting? That banks should somehow be legally obliged to grant overdrafts on request? Haven't we just come to realise recently that having banks that make loans willy-nilly without much thought is rather a bad idea?

Anthorn wrote: »

...In general the banks do get support from the institutions we trust ...

The only institutions that I can think of that support banks are the BoE and the government. I'm sure they'll both be pleased to know that you trust them. Personally I have my doubts, but maybe that's just me.

Anthorn wrote: »

...even though we all know that bank charges are exhorbitant when we consider that they can be heaped charge upon charge. ..

Well they can be if you help yourself to the bank's money without asking first.

Anthorn wrote: »

...That's even more relevant when we consider that any overdraft can be cancelled at will and repayment demanded over the short-term, in most cases less than 60 days. ..

I'm not quite sure why that's relevant, mind you.

Anthorn wrote: »

...
For example the OFT blew its own trumpet as it reported last month that as a result of its campaign to reduce bank charges bank customers paid £926m less between 2007 and 2011. What it doesn't say is that period also coincided with the rise of pay-day loan companies!

Unintended consequences.

izools

Anthorn wrote: »

That's you but it's not everyone is it.

That's as may be what you need to admit to yourself is that it is your choice not to be like that. You have all the information available at your fingertips to know exactly what your finances will be like over the coming months, however in your instance you choose not to use said information effectively.

No one has denied you knowledge about how your month is going to pan out financially other than you.

Gromitt

Maybe I'm paranoid about unintentionally getting a huge bill or someone ripping me off, but I check my finances on a weekly basis (takes about 15 minutes a week as I have 9 current accounts), plus I check the meter on my gas and electric at the same time and so can predict what my bill is going to be. So far, my estimation is within £1 of the real bill each time. I'd just go insane if I didn't check and then was told 12 months later "Oh, you've been underpaying, we want a back payment of £750".

The only shock I've ever received (so far) is a letter demanding to read my meter as I'm always at work when they call. Well how else would I be able to afford to pay it? I'm sure they don't actually think.

Anthorn

Gromitt wrote: »

Maybe I'm paranoid about unintentionally getting a huge bill or someone ripping me off, but I check my finances on a weekly basis (takes about 15 minutes a week as I have 9 current accounts), plus I check the meter on my gas and electric at the same time and so can predict what my bill is going to be. So far, my estimation is within £1 of the real bill each time. I'd just go insane if I didn't check and then was told 12 months later "Oh, you've been underpaying, we want a back payment of £750".

The only shock I've ever received (so far) is a letter demanding to read my meter as I'm always at work when they call. Well how else would I be able to afford to pay it? I'm sure they don't actually think.

I'm 62 years old now and been banking since I was 16 (Trustee Savings Bank) and if we disregard the company I worked for going down in 2008 and being made redundant, I've been burned twice which resulted in bank charges: The first was when my monthly pay went in late and the second was when I had a hefty fraudulent transaction. In the first case my employer paid me extra the following month to cover the charges and in the second case the bank recalled the payment but initially refused to refund the charges but then relented.

Perhaps this illustrates my point that we can never be sure what the future holds. Currently I check my current account online twice a day. But I'd say that the majority of bank account customers just arrange for wages or benefits to paid in, DDs and standing orders and debit card transactions going out and really don't otherwise have a clue about incoming and outgoing funds: The only time they get to know that something is going on is when they get a letter about bank charges.

On energy meters I concur: I have prepayment meters and I received a demand to check the meter. This is probably due to fraud prevention than anything else.

Anthorn

antrobus wrote: »

I'm guessing that by 'help' you mean 'borrow money'? What are you suggesting? That banks should somehow be legally obliged to grant overdrafts on request? Haven't we just come to realise recently that having banks that make loans willy-nilly without much thought is rather a bad idea?



The only institutions that I can think of that support banks are the BoE and the government. I'm sure they'll both be pleased to know that you trust them. Personally I have my doubts, but maybe that's just me.



Well they can be if you help yourself to the bank's money without asking first.



I'm not quite sure why that's relevant, mind you.



Unintended consequences.

I think you might find that if you leave that dream world of your's the real world is a lot different. Otherwise your post doesn't deserve a reply because it's basically nitpicking.