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When it gets towards the end of the month, funds can be very tight, especially for families and those on a low income. Most banks will offer you an overdraft facility and many people frequently use this style of credit to ensure they can meet essential expenses. There is an alternative, though. Salary loans, when used carefully, can also provide you with a source of extra cash to help you out in times of need. Neither option is designed to be used as a source of steady income or as a replacement for a regular job, however, they can both prevent you from running out of money when shopping for groceries or paying bills before your paycheque has cleared. Here are some of the pros and cons of using salary loans and overdrafts, according to Asteria.

Salary Loans

Available to almost anyone of working age in the Philippines, this style of loan offers fast cash, often on the same day.

Salary Loans Pros

Instant funds, often available within a few hours

One of the main advantages of a salary loan is the speed in which you can secure funds. Money can be in your account within a matter of hours and providing you can supply all the information your provider needs from you, most lenders in the Philippines will have no issue in accepting you. Unlike overdrafts, you can request fairly substantial amounts, too.

No overdraft fees

Though you can expect to pay interest on your pay day loan, loan providers in the Philippines won’t charge you a daily rate like many banks do. Overdrafts are rarely free, and users can expect to pay for the privilege of using one. Though this isn’t usually an issue if you have a regular income, any periods of unemployment can mean that your debt actually begins to cost you more money.

Fixed payments, every month

When you take a salary loan, you will be able to work exactly how much money you need to find each month. Unlike overdrafts, this rate is unlikely to change unless you miss a payment or borrow more.

Salary Loans Cons

Potentially high interest rates

Because they have a high approval rate and generally require you to provide far less data and information than standard personal loans, salary loans usually come with very high interest rates. This is to ensure that lenders in the Philippines can guarantee their customers will repay what they have borrowed on time. If you aren’t in a position to deal with these rates, never take out a loan of this kind.

Missed payments cause serious problems

Missing payments will always incur penalty payments and loan providers in Philippines will explain how much these will be when you first sign up. Not paying an instalment is considered a serious issue and can even have a knock-on effect for things like your credit score.

Easy to borrow too much

When you’re in a difficult situation financially, it can be very easy to borrow too much money due to panic or anxiety. It can also be tempting to use the loan to treat yourself a little. Overdrafts are set to a fixed amount so this is less likely to happen, whereas payday or salary loans can allow you to borrow quite substantial amounts.


Most banks will offer you an overdraft facility but whether you choose to use one is entirely up to you. There are a number of positives when compared to salary loans but there are some potentially negative aspects that should be considered, too.

Overdraft Pros

Convenience, no need to use other forms of credit

Once you’ve arranged an overdraft, you don’t need to do anything else other than withdraw or transfer money from your account in the usual way. Once you drop into your overdraft, you will be able to continue spending until you hit your limit. Providing you are aware of how much you have available; this means you can pay for things like groceries and travel without having to borrow from other sources.

Adjust the amount to suit you

Most overdrafts are adjustable and can go up and down, depending on your individual needs. Your bank will approve a request to extend your overdraft or reduce it, providing you can demonstrate that you can manage the limit responsibly.

Lower limits can mean you spend less

Most overdrafts don’t go above around £2000 and even this would be considered a high amount. As you are usually given a lower amount than you would get from a salary loan, this can help you to spend less than you may do when using other forms of credit.

Overdraft Cons

Daily charges

Over time, daily charges can mount up and eat into your finances a whole. Though they are usually limited to a small, manageable amount, it’s easy to forget that these micropayments are all contributing to your overall debt.

Penalty fees for going over your allocated amount

When you go over your allocated overdraft amount, this gives your bank permission to charge you a penalty fee, much like the loan providers in the Philippines do. These fees can be quite substantial and may also lead to your bank reducing your allocated amount or cancelling your overdraft entirely.

May not be enough for larger purchases

If you need to make a larger purchase such as a new vehicle, an overdraft may not be the best option as your funds are limited. Even larger overdraft allocations rarely stretch to much more than 2000 dollars, so using them to cover more significant expenses can be tricky.


Depending on the amount of money you need and what you’re going to be using it for, choosing between a salary loan and overdraft should be fairly straightforward. If it’s a small purchase and you can afford to pay a small amount of interest, overdrafts are fine, however, if it’s something more substantial that can’t wait, a salary loan is probably a more appropriate option.

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