Sometimes, despite the best laid plans, you can find yourself in a situation where you need to borrow money at short notice. Here’s how to make sure that your tight time schedule doesn’t mean you get ripped off.
Here are some of the best ways to borrow money when you need to get credit on a tight time schedule, without paying through the nose for it.
Use an existing credit card
If you have a credit card with a sufficient credit limit to cover your purchase, or the amount you need to pay, then this could be the cheapest, and most convenient option.
Even if your card no longer offers a low introductory interest rate, there is no reason why you can’t either pay off your spending within the same month so you avoid interest altogether, or complete a balance transfer at a later date to move the debt to a cheaper home.
If you have do have more than one credit card then you should check which charges the lowest rate of interest and, providing it has a large enough limit, use it to pay so that you minimise any interest you incur if you're unable to clear the outstanding or move your borrowing to a different card before you're charged interest.
For more information read our guide on How to borrow without paying any interest.
Ask for a credit limit extension
If you already have a credit card but not enough available credit to meet your needs then you could ask for your credit limit to be increased.
An increased credit limit can usually be applied to your credit card within 48 hours, sometimes sooner, as long as your lender is willing to extend the limit. Whether they are willing to do this will largely depend on your credit record and history of making repayments on time.
However, if you need access to cash then you should try to avoid using your credit card as making a cash withdrawal on your card will cost you dearly in interest and charges. Take a look at our guide The Real Cost of Cash Advances to find out more.
Ask friends or family
While this is never an ideal option, if you need to borrow money in a hurry asking a friend or family member for a short term loan could be a much cheaper option than seeking credit from your bank.
Of course, exactly how quickly they’ll be able to lend the money and whether you’ll be charged any interest will entirely depend on your friend or family member’s circumstances.
If you are planning on borrowing money from a family member it makes sense to outline what you are borrowing in writing, detailing how much you will pay back and when.This way if there are any disagreements regarding the loan in the future you will both have something on paper to refer back to.
Use an authorised overdraft
One of the easiest and quickest ways to borrow money in a rush is via an authorised overdraft on your current account. It’s perhaps the most flexible option as you can pay using a debit card, withdraw cash or even online via pay pal or by writing a personal cheque.
You can check if your account has an overdraft facility by contacting your nearest branch or logging on to your internet banking facility.
If you find that you don’t have an overdraft then you could get one added to your account within a relatively short time frame.
Providing your bank is willing to extend the credit facility to you, this can often be done over the phone and is usually applied to your account within 24 hours (subject to a satisfactory credit check) giving you access to withdraw cash or make a payment with your bank card.
If you already have an overdraft you should check whether your limit is sufficient to cover the amount you need to borrow and if not ask your bank to temporarily extend your overdraft limit (again, this is likely to be dependent on credit checks).
Applying for an overdraft extension in this way will be much cheaper than simply going over your existing limit, as this is likely to mean you'll incur hefty account charges as well as damage your credit rating.
However, using your overdraft could still be a particularly expensive way to borrow as high interest rates or charges often apply.
For this reason you'll need to check exactly what you’ll be charged for using your overdraft, so you can compare your options and work out whether there is a cheaper alternative. Read our guide How to Work Out What Your Overdraft Really Costs to find out more.
When you use your overdraft to get quick access to cash you should make sure you have a plan to pay it off, otherwise you could find yourself constantly in your overdraft accruing more and more interest and charges each month. Take a look at our Action Plan How to Pay Off Your Overdraft to find out the best way to do this.
Apply for an instant decision credit card
If you can wait for a couple of weeks, then applying for a cheap credit card could be worth considering.
Although instant decision credit cards should let you know immediately if you’ve been accepted, you still would have to wait for the card to be printed and a full credit check completed before you could use the account.
This is likely to take at least 2-3 weeks even if things go smoothly, so is significantly slower than some of the other choices in our list.
To compare the best instant decision credit cards directly, visit out Instant Decision Credit Card comparison table.
Money transfers
If you have credit available on a credit card but want to spend using cash then you should investigate whether you are able to make a money transfer.
Money transfers work in a similar way to balance transfers, but instead of using one credit card to pay off the balance of another credit card, the money is moved as cash into your current account.
However, not all credit cards offer this facility and many of those that do will charge a higher interest rate and fee for the privilege – so make sure you know exactly what you’ll have to pay before you proceed.
Some credit cards offer 0% money transfer deals, subject to a fee of around 4%. If you can wait a couple of weeks for the cash it may be worth considering applying for a new credit card that offers cheap money transfers if the cards you own don't have this facility.
If you find you’ll be charged a reasonably high interest rate for your money transfer, there is nothing to stop you from completing it and then searching for a new cheap balance transfer deal to move the debt to a low interest home while you pay it off.
The main disadvantage to this method is that you’ll pay two transfer fees, increasing the cost of borrowing the money. However, despite the duplicate fees, this method could still workout cheaper than an alternative.
Of course, you will need to be confident that you'd get accepted for a new balance transfer card, or have the money available to pay it off before you do this. Otherwise it could prove very costly if you were rejected and were unable to move the transfer balance to cheaper home.
To request a money transfer, you will need to contact your credit card provider directly and give them details of which bank account you would like the money transferred to.
Again, you will need to have a plan in place to repay the money before you make the transfer. Take a look at our Action Plan How to Clear Your Credit Cards for top tips on how to do this.
Take out an express unsecured loan
If you need to borrow a sizeable amount of money, then an express unsecured loan could be a good option.
This type of loan can often be completed within 48 hours for an extra charge and would provide a structured repayment plan, giving you a fixed amount each month to repay.
However, before applying for a loan of this type, you should consider if you can truly afford the burden that the monthly repayments would represent and the number of years you’d be willing to spread your loan over.
As with other credit applications, whether you’d be accepted and the interest rate you’d be offered will depend on your credit history.
So make sure you are happy with the loan offer you’ve been quoted before accepting.
Look to social lenders
In recent years borrowing online through peer to peer lending sites has become increasingly popular and could provide an affordable alternative to high street lenders.
If you application progresses smoothly you could have the money in your account within a few days, although if there are problems verifying your details or your application is refereed then it could be take significantly longer than this.
For more information read our guide: Social Lending – Is it worth the risk?
Payday loans
If you are in an urgent hurry to borrow money and have exhausted all the other options listed above, then you could consider a payday loan as a last resort.
This type of borrowing is extremely expensive, with most payday loans charging interest at a rate of over 3000%, which makes even the most expensive credit cards look like a bargain!
However, if you are struggling to find any other way of borrowing money at short notice and desperately need the money now then they could be a useful alternative.
Before even considering a Payday loan you will need to have a plan in place to repay it as soon as possible or your interest charges will start to mount and could quickly become incredibly expensive.
Read our guide Should I ever Take out a Payday Loan? For more help deciding if a payday loan is a suitable option for your finances.
If you have decided that a payday loan is your best option, you can compare the different loans on offer using our Payday loan comparison table.
Speak to person or business that you need to pay
Often the best option when faced with having to borrow money at short notice is to address the issue head on and let the person you owe money to - be it a financial institution, a landlord or a private business - know that you are struggling to pay on time.
Many businesses will be willing to delay payment for a short period if you explain your situation and advise them as to when you should be able to make the full payment.
You might also want to take the time to consider if the payment you need to make is truely essential, and worth potentially getting into further debt, if that’s not the case then you might want to delay, and give yourself more time to get the money together.
Work out the cheapest option
If you have no choice but to borrow you should investigate each of the options listed above and work out which will present the cheapest access to the money you need.
Remember that any delay in payment may be subject to additional interest charges and fees too so you'll need to compare the cost of going down this route with the alternatives too.
Seek debt advice
If you need to borrow money on a regular occasion to pay your bills or meet existing minimum repayments then you may need to look more closely at your finances as a whole.
A good place to start is to set out a full budget of your finances, so you can get a clearer picture of where your money is going. Try following out Action Plan: How to Stick to a Budget for a step by step plan on getting started.
If you feel that you are struggling to manage your money then contacting your nearest Citizen’s Advice Bureau is a good way to discuss your individual circumstances with an independent advisor.
