When we were all credit crunched in 2008, a lot of media focussed on the negative effects of decades building up credit. They were, of course, right – many people had borrowed more than they could afford and were left in dire straits when the economy faltered.

After nearly three years of paying off more debt than weve accrued, one would assume that the situation was getting better, however, at the start of December news outlets reported that nearly 60% of us will consider getting a high interest, unsecured, short-term pay day loan to see us through to the next pay cheque.

Loans in themselves are no more risky than any other financial product, nor do they have to be expensive if you opt for long-term loans from Santander or other well established high street banks. However, the problem with pay-day loans is that they can charge up to 4,000% interest. So if you cant pay the loan back the very next day, you could fall into a debt-trap very quickly.

However, people get these loans because theyre preferable to an overdraft or credit card charge, but there are other solutions. First of all, credit cards used correctly and cleverly can be very cheap – especially if you take advantage of introductory offers, or protracted 0% periods. Its not an ideal way to borrow, but if youre disciplined (and you really should be to consider getting a pay-day loan with massive interest rates) it can work out as the cheapest way to borrow.

Another alternative would be to get a longer term, low interest unsecured loan. These are ideally focussed on specific projects rather than for dealing with short-term cash flow problems (in fact, they shouldnt be used at all for cash flow), however, with energy bills so expensive at present, a long-term loan can have the double effect of helping you trim money of your bills by making efficiency improvements to your house, and giving you a little extra cash.

The third option is to try to release some equity from your house, just until you get your finances under control. This works if youve got spare equity in your property (which few people do at present), and if youre already comfortable dealing with mortgage repayments, otherwise, its only worth doing if youre extremely careful.

So, there are alternatives to pay-day loans, the most sensible of which is getting a good deal on a low interest credit card, or finding other ways to trim the amount of money that you spend on a day to day basis. The easiest of this is to change provider for some financial services like home insurance, or to reduce energy bills, in which case check out the Energy Saving Trust for more ideas.