- For spending cash. Using a pay day loan for a little fun money is not a wise use of the funds. Payday loans are easy to access, but they are in no way cheap. Before you use your pay day advance for fun and entertainment purposes, ask yourself if the activities or purchases are worth what the loan will cost you. It's not uncommon for payday loans to have triple-digit APRs (varies by lender), which is a big price to pay for some extra cash on the weekend.
- To supplement your income. People who routinely spend more than they earn will eventually end up having to borrow to make ends meet. In many cases, consumers who are living outside of their means rely on pay day loans to make up for what they lack in income. But what you have to understand is that a payday loan doesn't supplement your income-it detracts from it. You are basically borrowing your own money and then some when you take out a pay day loan, so it's completely illogical to use it as a regular source of income.
- To pay other debts. Borrowing from one lender to pay another may buy you time, but it is also a red flag that your debt situation is becoming perilous. You can only pay off debt with debt for so long before you run out of options. Using pay day loans to meet your minimum credit card payment one month is one thing, but relying on them to pay all of your debts is another. A payday loan is not a solution to debt problems.
- To cover routine expenses. Taking out a pay day loan to pay for unexpected or irregular expenses is perfectly justified. Things like insurance premiums, vehicle repairs, and other expenses are sometimes hard to plan for. However, if you're using pay day loans for routine expenses you know to expect every month, like rent, groceries, etc., you might have a larger financial problem to address.
- To take the easy way out. Sometimes when cash gets low, you know you could probably make it until payday if you just cut back on spending and watched your budget carefully. In these situations, of course it's easier just to borrow, but it's also more expensive. Don't borrow pay day loans if there's any way you could make ends meet on your own.