Payday Loans vs Credit Cards.

Payday Loans vs Credit Cards

Q. Which is better? A cash advance from your credit company or a payday loan?

There are many times when you come across a situation where you need cash to pay for an emergency expense.  Ideally you have enough money in the bank account or can tap into other resources to pay for things that come up.  However, we know that’s not always the case.  You can choose between a payday advance or look into an installment loan.  Another resource is to get cash from your credit card company.  Most financial institutions and banks will allow you to borrow money when you have a cash emergency.  In this case you will need a bank account and a good credit score to be approved.  Some borrowers will look into auto title loans and other products and services instead of working with their creditors.  Do you know which of these choices is the best route to take?

The largest factor influencing the use of credit cards and payday loans are the interest rates that are applied to them.

In most situations, you will deal with high finance charges and fees that come with all different types of short term loans.  These can include car title loans, payday advances and even personal loans from your bank or credit union.  Creditors will assess these high rates because the borrow they work with is seen as a high risk creditor.  There is likely a past due credit card or payday advance in the past.  Some applicant’s don’t have a checking account and they may have a past repossession or bankruptcy.  Use our online ranking of the best payday loan sites to better understand the lending options that are available.

A credit card is an ongoing equity line used to make purchases of any amount up to your credit card limit. Most online advances are similar to if you bought an item with the card.  You’ll end up paying high finance charges especially if a large amount of time lapses from when you first bought the item.  However, some credit card companies charge higher interest on cash advances than that of standard purchases, such as a daily rate compared to that of an annual rate. That’s why you need to take into consideration your longterm financial well being when you make instant purchases.  may in fact end up costing more in interest over a longer term than that of a short term payday loan despite the difference of interest rates between the two.

What To Do When You Need Cash?

It really depends on how well you are able to manage your money, and how well you can guarantee that you’ll be able to satisfy a debt when it is due. That said, the two main key points to consider between unsecured and secured loans are;

Interest rates

Only about 1/3 of payday loan companies (including those that are found only online) actually disclose the interest rate for payday loans to potential customers, instead citing fees that can re-occur upon payment failures – which can end up turning into an APR of over 2000%. Credit card companies nonetheless display the annual interest rate no matter the medium, which typically falls between 10% and 20%.

Time to pay

With payday loans, you must pay the debt back the moment your next paycheck arrives, or you pay a significant price. Credit cards on the other hand may be paid off over an extended period of time yet can result in making it easier to sink further into debt.

All of this becomes a moot point if you do not have a credit card or the means to obtain one, therefore the best solution is to start a savings account where it can accrue interest and be used for such unexpected emergencies. That said, if a short term loan is the only solution then try to choose a reputable lender such as Ace Cash Express, CashNetUSA or

Ranking Of Companies That Offer Online Payday Loans