
A Guide to Accessing Funds When You Need Them
Cleo's resident financial advisor, Anna Yen, answers all your FAQs about accessing quick cash.
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Here’s how Elise got out of $4.5k debt and escaped the payday loan cycle
Twelve million Americans turn to payday loans every year, spending $9 billion on loan fees. With some of them charging interest as high as 600%, it’s easy to get trapped in a payday loan cycle.
If you’ve found yourself in a payday loan nightmare, don’t be too hard on yourself. Payday loans are slippery b*stards designed to keep you in debt.
Don’t worry, there are plenty of solutions for getting out of the payday loan cycle.
Here’s how a member of the Cleo community, Elise, did it. We’ve also listed a load of alternative techniques for ending a payday loan nightmare at the end, too.
Over to Elise.
It got to summer, I’d just turned 19, I started to see this guy and he was in a really bad financial way. I did end up paying for a lot of things he wanted. We ended up running out of money really quickly, and then I started to take out these payday loans. These ones weren’t that bad, they were basically marketed as student payday loans. You could only get up to $500 every few months, then as soon as your loan came in they would take that back plus like $100 interest. I was taking out these student payday loans for the next couple of years throughout college.
Just a note: Elise clarified to us that she felt she had a choice over how she spent on her partner. But if your partner is controlling your finances in any way, this might be financial abuse. You can find 24/7 support here. Back to Elise.
You pay one off, but then you’re down and you have to take your money out to bring your money back up. Me and my ex broke up after a few years and I was left with all of this debt. In relationships after that I felt like I was only appreciated if I bought stuff for people. I started taking out more, but it was the bad kind of loans with really high interest. My mental health spiraled.
I started going on antidepressants for quite a long time. I was staying inside all the time because I didn’t have any money to spend, and it got to the point where I had to come clean to my Dad. No one knew for a long time. I started doing night shifts three nights a week to make money. I could only keep that up for a couple of months. My grades at school were dropping.
He helped me a bit each week - just like $35 a week towards food, and he paid for my transportation. He traveled up to see me, sat me down and got me to do an excel spreadsheet. We had to go through all of my payday loans, all the emails I got, how much I owed.
It’s so tough having to lay it all out in front of you because you don’t want to be looking at that. Before that I was keeping all of the figures in my head, letting it build and build. He phoned up all the payday companies and got them to put me on a list to say they can never lend me money again. It’s similar to gambling.
I was lucky because my Dad paid the loans off to stop the interest. Then I had to pay him back each month. A couple of months after I paid all of that off, I moved cities and started a new career for a salary increase. Payday lenders don’t do enough checks. They don’t look at how many loans that person has out. If there was an app like Cleo that I knew about at the time that would have been really helpful.
The reason I was taking out these loans was to please other people. Even with my first girlfriend, I did take out another payday loan. I thought I’d finished all that. I took out a payday loan to book us a trip to Rome. It wasn’t for myself, it was to try and keep people close to me.
An AmEx with a $15,000 limit on and another that’s $2,000. I’ve had those for over a year and whatever I spend on them I always pay back at the end of the month. I’ve just been offered another $6,000 to add to the AmEx because my credit rating has gone up.
I would just say it’s so much better to be honest and open about it to people you’re close with. Otherwise it just eats you up. I was so scared about telling my dad. When I did I felt so embarrassed and ashamed but I had this huge weight fall off my shoulders.”
Getting financial help from people close to you is just one way of ending a payday loan nightmare. Obviously, we know this isn’t an option for everyone. There are plenty of alternatives.
The alternatives generally include taking out a much lower interest loan to pay off your high-interest loans, and creating a manageable payment plan. We’re not financial advisers, but we can point you in the direction of experts. These are the options Experian lists:
💰 An Extended payment plan (EPP)
💰 Debt consolidation loans
💰Payday alternative loans (PALs)
💰 A Debt management plan
Each option has its own pros and cons. Check out the full explanation of each on Experian’s website, so you can find the right one for you. The laws governing payday loans vary from state to state, so check what the laws are where you live.
Obviously, the most ideal option is to not take out a loan with steep interest in the first place.
💰 Create a super tight budget so you can glide your way to payday. Our free money app is pretty good for that.
💰If you do need a quick spot, avoid interest to stop a downwards cash money spiral. Cleo’s Cash Advance* can offer up to $250, has no interest, and is aimed at helping you eventually not need it.
You can find out how to get a Cleo cash advance here.
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Big love. Cleo 💙
*The Cleo Plus subscription offers saving goals, hacks, challenges, APY on savings, credit score insights, and access to cash advances if eligible.
Cleo's resident financial advisor, Anna Yen, answers all your FAQs about accessing quick cash.
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