Americans as a whole are in rough financial shape. A survey from the Federal Reserve found that nearly half of all Americans would have to sell something or borrow money to cover a $400 expense. So where do Americans go when they need to make quick money to cover something unexpected? The answers may shock you!
An overwhelming amount of Americans believe that they can count on friends or family to loan them money. While borrowing money from friends or family may seem like an easy answer, it can often become complicated. No one wants to become a loan shark for their own loved ones.
While it’s definitely more convenient than borrowing from a bank, it can lead to broken relationships down the road. Financial experts say that loaning money to your loved ones is one of the biggest financial mistakes you can make. Even so, it’s still one of the most common ways to get quick money to get out of a sticky situation.
Credit cards are one of the fastest ways to take care of a big expense: swipe, sign, and done. Since 60% of adults have a credit card, they’re also one of the most common financial tools. However, putting large expenses on a credit card can be a trap. In exchange for quick money, credit card companies can charge excessive interest as well as annual fees.
Cash advances from a credit card have even more interest than a typical credit card purchase – up to 55%! Whenever possible, you should only use a credit card for a large purchase when you can afford to pay it off right away. If that large balance is left for more than a month or two, the building interest will make that expense even more of a hurdle.
Payday loan companies have seen more substantial regulation in recent years. Still, they’re one of the most common ways to get quick money in a pinch. Most payday loans are for a few hundred dollars and are due on the borrower’s next payday. The bad news is that payday loans can become a vicious cycle. In exchange for the loan, payday lenders can charge large fees. Then, when the money’s due, the borrower ends up paying substantially more than they borrowed.
The average payday loan borrower repeatedly spends over $500 to borrow an average of $375. Plus, they tend to be in debt to the payday loan company an average of five months per year. Although it can be tempting, financial advisers recommend avoiding payday loans.
Pawn shops offer a convenient, often 24-hour option for those looking to sell something valuable in exchange for quick money. Selling items through pawn shops is fast – usually only 20 minutes – and pawn shops can provide cold, hard cash.
The downside: pawning something valuable often requires a sacrifice. Jewelry and electronics are the most common items to pawn, which not everyone may be able to give up. Plus, pawn shops don’t always offer top dollar. As stores themselves, you’ll only be given a fraction of what they expect to sell the item for. Although pawn shops are fast, you might get a better price on your item by selling on eBay or Craigslist.
Quick Money Alternatives
Although these are the most common options, they’re not the only options for making a quick buck when you’re in a bind. Rather than going into debt, the best thing to do to cover unexpected costs is to generate new income. To do that quickly, you have a couple options.
Perhaps there’s a service you can offer via freelance platforms, like Fiverr. You can also use sites like TaskRabbit or Thumbtack to offer services to people in your area – like picking up dry cleaning, performing lawn care, or doing light housekeeping. If you have a car, consider driving for Uber or Lyft to make extra money on a convenient schedule.
There are a ton of ways to make quick money without having to sacrifice your financial well-being.