How to Avoid Using a Payday Loan to Buy Groceries

Inside Subprime: Jan 28, 2019

By Lindsay Frankel

40 million people, including 12 million children, struggle with hunger in the United States, and not all are eligible for government assistance. While food is a basic need it can be difficult to secure enough food for your family on a limited income. And when gaps in income or emergencies arise, many people turn to payday loans to put food on the table. But these risky, high-interest loans can drive borrowers into debt, making it even more difficult to afford food later on.

There are more payday lending storefronts in the U.S. than McDonald’s restaurants, and if you’ve ever run out of money for food, you might have considered visiting both establishments. But getting food at the drive-thru is not your cheapest option, and will negatively impact your health. Similarly, costly payday loans should be a last resort, since they cause undue harm to your financial health. If you or your children are hungry, there are better options available.

Budget and buy strategically.

Setting a budget for food is one of the best ways to ensure you’ll have enough to go around. Compare what you spend with the official USDA Food Plans to see if you might be able to cut costs. Buy house brands, shop for sale items, and buy in bulk when you can. You should also be strategic about what you buy; get foods that are whole grain or high in protein, which will fill you up without breaking the bank. Check out this list of 5 home-cooked meals that are cheaper than McDonald’s. For more information, see our guide saving money on your grocery bill.

Apply for assistance.

If you’re struggling to cover the cost of food, you should check to see if you’re eligible for the Supplemental Nutrition Assistance Program in your state. For states without online applications, you’ll need to visit your local SNAP office. If you qualify, you’ll get a card that can be used at authorized food retailers to help you purchase groceries. You can use this pre-screening tool to check your eligibility. It can take up to 30 days to receive your benefits, so if hunger is a problem for your family right now, you might also consider another option in the meantime. You should also look into other programs that may defray other costs, such as rent assistance.

Visit a local food pantry or soup kitchen.

Charities, nonprofits, and faith-based organizations can help families who are struggling to buy food. 4.3 billion meals each year are distributed each year through the Feeding America network of food banks. You can also find other local food pantries through this resource. Hours vary by location, but you’ll likely find a place to get a meal soon.

Take out a lower-cost loan.

If you’re not eligible for assistance and you need to borrow money in an emergency, consider all other options before taking out a payday loan. Personal loans from banks and credit unions will have lower interest rates, as will credit cards. But those who lack established credit history or have bad credit may have difficulty accessing these options. If you need a no credit check loan, consider taking out an installment loan. The combination of longer terms and lower interest rates makes these loans easier to manage for most people. Plus, making payments on time will help you build credit, which will set you on the path towards a healthier financial future.

For more information on payday loans, scams, and cash advances and check out our city and state financial guides including Illinois, Florida, Texas and more.