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While payday loans have been around for ages in the USA, they are a comparatively recent service for United Kingdom customers, and a lot of people aren't sure precisely what they involve. Regarding all the arguing over whether they're a worthy service or just a type of legitimised loan sharking, it's a good idea for any United Kingdom resident thinking about applying to know exactly what they're getting into.

Many of us have spent all our funds when getting towards the end of the month to one extent or another, and have to economize a little by trimming down on socialisation or other forms of unessential expenditure. This is an absolutely normal (if annoying!) fact of fiscal life for most of us who are employed and get paid every month. Occasionally however, running out of cash can be more problematic than this if there are important expenses to be paid such as an unexpected bill or repair cost.

Many people use the overdraft facility of their bank accounts to allow a bit of a margin when money is tight, but today many people are always overdrawn and approaching their limits, so this may not be an option.

An auxiliary method of keeping going until your next pay is to use a credit card, both for purchases and cash advances. There are numerous drawbacks with this, not least the fact that credit cards are a less than inexpensive type of finance, and there's the temptation to to build up a heavy balance which can have a fateful effect on your long term financial health.

If neither of the previous two alternatives sound good for you you, then a pay day loan might be worth thinking about. In short, these loans are available to virtually everyone with banking facilities and a debit card, and who is employed. When you take a wage advance loan out, the issuer will transfer the sum you ask for straight into your account, usually within a day of your application being accepted. On your application you will have provided your debit card information, and the lender will use these to automatically clear your loan on your next pay day, along with their charges.

And in this lies one of the essential problems with wage advance loans - the expense.

This type of borrowing is notorious for being expensive, and eye-watering interest rates of 1000% or even much higher are standard. These interest rate figures are perhaps a little misleading, as the APR system is intended for finance with a longer repayment period than pay day loans where the term is measured in a matter of days rather than years. Even so, these loans are quite pricey, with a cost of a quarter of the amount you borrow broadly the going rate.

The other serious problem is that paying off your loan and fee is likely to leave you moneyless again at the end of next month, and it's all too easy to get into a punishing vicious circle of applying for a loan each month - which is when those exorbitant interest rates will really bite.

So, is there any benefit to a cash advance loan? Of course, but only in truth for an honest emergency where there is no alternative. If you're relying on payday loans to pay for your day to day life, then it would be a better idea to examine your budget and see where you can economise, or to restructure your debt using a consolidation program or similar to free up some surplus funds every month.

Martin writes for a fast payday loans provider in the UK, and you can read more about the pros and cons of wage advances at his site as well as applying online.