While payday loans are the quickest funding source when you need money, overdraft is the fastest founding source when you are out of work and running out of cash. Overdraft deals are expensive and they may take a toll on your finances, no matter how hard you have been managing to follow your budget. It is imperative that you should carefully review your financial condition and build up an emergency cushion. A saving account can be knight in the shining armour when you feel like lost in excruciating turmoil.

A bank overdraft is a fee that your bank charges as you fail to keep up the minimum balance in your account. The debt continues to soar with each transaction and unless you deposit money to come back on track. Some banks provide you with overdraft protection, but it does not mean that you can escape fees and high EARs. Depending on the policy of the bank, overdraft fees can be charged weekly, bi-weekly or monthly. Some banks allow their customers with ‘no fees’ facility, but this privilege is available for borrowers who have very good credit score. Your creditworthiness determines offers that banks and other financial institutions propose to you. This is why overdraft fees and interest rates vary from individual to individual.

How can you avoid high overdraft fees?

Many people end up with high overdraft fees during unemployment. Unexpected layoffs throw a wrench in your budget especially when you have very little and no emergency cushion. Financial experts emphasise savings so that you do not need to rush into borrowing money even for a small expense. No matter which bank has your account, overdraft fees will take a large chunk out of your money, leaving you strapped. You are also likely to fall in a predatory cycle of debt.

Talk to your bank to know if they have some cheaper overdraft deals. Some banks do no charge fees up to a certain amount and an affordable EAR beyond the limit. Compare options to get the best deal as much as possible. However, this will require a credit check. 0% overdraft deals are mainly available for borrowers with good credit standing. Yu must note that 0% does not mean that you have to pay nothing. Monthly minimum payments are allowed to avail the deal.

Zero percentage deals are also available for poor credit borrowers too provided the defaults have been 12 to 18 months old when you apply for the card. You will have to pay minimum monthly otherwise you will lose 0% offer. Try to avoid balance transfer as it attracts hefty interest charges.

Alternatives to overdraft

Unemployment is a temporary phase, yet excruciating. Despite working harder to land a new job, it may take forever. Reasonable deals are mainly available for good credit borrowers, and if you get an overdraft deal despite poor credit score, you will end up paying hefty fees and interest. It will be like driving a nail into the coffin. You should take out 100% guaranteed loans for unemployed with a direct lender.

100% guaranteed approval does not mean that there are no grounds on basis of which your application can be turned down. It rather means the lender will make every possible effort to approve your loan application. However, you are likely to get amount less than you quote. This is because the lender will peruse your income statement to know your repayment potential. Such loans require neither collateral nor guarantor and are a right source of funding small expenses.

No guarantor loans for unemployed are accessible only when you have a source of income. It can be anything from a part-time job to side gigs. APRs of these loans are more affordable than interest rates on overdrafts. Make sure that you have done extensive research to choose a reliable lender. Some loan companies provide these loans with no credit check. Beware of them as they charge outrageously high interest rates and eventually you may fall into a predatory debt cycle.

Reputed lenders offer these loans after running a sot credit check. This does show up on your credit report and therefore you do not lose your credit score.

If you are unemployed and want to borrow money, you should take out a loan for unemployed with a direct lender. Overdraft deals are more expensive than loans.