Payday loans (short term money, fast cash) are advertised on TV and the internet to tempt you into getting cash quickly to pay bills or money owing


If you fail to pay back the loan on the due date you will usually be charged default fees that are added to your debt.

The total amount that can be charged in default fees can be up to twice the amount you borrowed.


When you sign up to a direct debit, lenders can take money straight out of your bank account once money hits it. This can happen before food, rent and other essential bills are paid.

Payday lenders often get you to sign a document authorising them to automatically direct debit payments from your account.

You may want to stop the direct debits because you want to make payments another way or you no longer want to pay the business at all. Cancelling a direct debit does NOT make the debt go away and it won’t stop a payday lender from chasing you for money.

Sometimes your credit report may be affected if you cancel a direct debit and fall behind on making payments to the business.

The law does not allow you to cancel direct debits from your credit card. You can only do this by
cancelling your credit card.


Sarah separated from her abusive ex-partner in November 2017 taking her two children with her. Her ex-partner smashed two of her mobile phones leaving her socially isolated and in debt with Optus. Sarah was working part time at McDonald’s earning $200 per week and receiving support from Centrelink.

In December 2017 Sarah applied for a loan through Cigno because she was trying to re- establish herself – she had no savings, limited income and debts to Sunshine Loans, Optus and the Bank of Melbourne. Despite this Cigno lent her $250. Earlier this year Cigno advised that over $900 was still owing.

With assistance from Consumer Action, Sarah was able to walk away from the debt that Cigno claimed she owed.

There are better options available than a payday loan

  • You can ask for an affordable repayment plan through your bank, electricity, gas, water or phone company by asking to speak to their financial hardship team
  • You might be able to get an emergency relief grant for your energy bills
  • You might be eligible for a no interest loan to pay for household goods or important services such as medical treatment

If you need help urgently with living expenses, there are emergency relief programs to help you with things like food, transport, housing, essential services and clothing.

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