Heightened retail sales could increase short term lending demand

After a few months of slow sales, retailers saw consumers spend at the fastest pace in three months in October. With more money being spent on clothes, electronics and sporting goods, retail sales totaled $428.1 billion - a 0.4 percent jump from the previous month and 3.9 percent year-over-year increase, according to the U.S. Department of Commerce.

"Consumers are marginally better off compared with last year," Thomas Simons, a money-market economist at Jefferies LLC, told Bloomberg. "We have been adding more jobs, and while wages are somewhat flat, people who were earning nothing before are earning something now."

Spending is expected to continue to pick up in the coming months with the holiday season right around the corner, which could put consumers at risk of financial troubles.

"We find that the lead-up to the holiday shopping season is an important signal for how sales will go at that crucial time of year," Peter D'Antonio, economist at Citigroup Global Markets Inc said in a research note, according to the source. "We think that rise, along with improved consumer fundamentals, indicate further gains later in the quarter."

Short term lending could prove beneficial to holiday spenders

People who do increase expenditures might be unknowingly putting themselves at risk of falling short on essentials following the holidays. If budgets are stretched too far, an unexpected expense could be crippling.

For example, someone who spent a lot of money during the holidays whose car breaks down in January or February could be cash strapped and unable to cover the cost of the repair and their bills. As a result, they could face costly late fees and penalties.

But, that doesn't have to be the case, as short term lending could prevent such a situation from happening. As soon as a consumer realizes they are in trouble, this type of financing could provide funds fast to ensure that they stay current on all expenses.

People concerned about the potential costs of a short term loan need to consider what will be charged if a payment is missed on a certain account. In numerous instances, this total will be more than what consumers incur by obtaining a loan, which could make this type of financing beneficial for many people.