If you need a short term loan, you're much better off getting one from a credit union than a payday lender.
Credit Unions are not for profit savings and lending institutions run by and for their members. By law they can't charge more than 42.6% APR for a loan (it used to be 26.8%, but they are now allowed to charge more). However many charge far less. What do you need to know if you're thinking of using a credit union?
Interest on payday loans will be capped at 0.8% a day from January 2015
The Financial Conduct Authority (FCA) said it plans to limit payday loan interest to £24 for £100 loan over 30 days
Payday lenders will not be able to charge more than 0.8% interest a day from January 2015. That's been confirmed today (11th November) by the regulator, the Financial Conduct Authority. That works out at £24 for every £100 borrowed over a month. Importantly, if you borrow from a payday lender you will never owe more than twice the amount you borrowed.
Payday loans promise easy access to cash for short periods. But they can charge £80 for a £300 loan for a month.
If you need money quickly, a payday lender may seem like a good option. But be aware that they charge interest of up to £30 for every £100 you borrow for a month. And if you can't pay back your loan, there could be other charges as well.