Getting a payday loan is considered by many business experts as a financial suicide. To illustrate, consider a payday loan which is worth $200. The usual interest rate for such a short-term loan is 15%. This means that to pay off this loan, a borrower must write a personal check of $230 and it will be due in about two weeks.

Often, the borrower cannot pay off this payday loan in so short a time. And so the payday loan company offers the roll-over option. The roll-over is simply an extension of the loan and the borrower simply needs to pay the interest. In this case, the interest is $30. If the roll-over option is done four times, the total interest that the borrower had paid for a lousy $200 is $120.

Clearly, it is easy to reach the stage when the interest becomes higher than the principal. And this is why getting a payday loan is like committing a financial suicide. Unfortunately, there are inevitable circumstances in life that demands the need for extra funds, and the payday loan seems to offer an easy way out. But the easy way is not always the best way. There are other financial options that are better than payday loans.

One of the better financial options is to scout for sources of emergency cash that do not demand high interest rates. The most obvious source is either a member of the family or a friend. For people with close family ties, it is easier to disclose dire financial situations. Relatives and friends are often willing to help out. The only rule to remember is to pay them as soon as possible or even pay them in a manner similar to credit cards: partial and regular payments. The best part is that there is no interest to pay.

If borrowing from friends and family gives an uncomfortable feeling, another financial option is to get an advance pay from the employer. Many employers are sympathetic to their employees, especially if the employees clock in valuable work. It never hurts to check out the possibility of obtaining an advance pay. The advance pay does not demand interest. But it does mean that the future work is already paid. This means that to be able to receive some wage on payday, a person should put in more hours of overtime work.

Another source of emergency funds is the credit card through the procedure called cash advance. Credit card advances demand interest. But, when the annual interest rate of the credit card is compared to the annual interest rate of payday loans, the credit card becomes a wiser option. When there is more than one credit card available, it is best to compare their interest rates.

Some credit cards have interest rates for cash advances that are different from those for purchases. These have to be checked too. Once interest rates are compared, the next thing to do is to get a cash advance from the credit card that offers the lowest rate. If the credit card is not a viable option, there are community-based organizations that offer loans to individuals who are members of their community. They still charge lower interests than payday loans.