The Square Off Between a Payday Loan and a Credit Card

Sometimes, you find yourself in the middle of a difficult financial situation and there just seems to be too few alternatives at hand. You find yourself stuck between a rock and a hard place. In truth, the best option when it comes to financial woes is to save and save some more. No amount of loan can replace hard earned money. But, if you need If you have to ask, which has the better deal? Then here are the pros and cons of both.

A payday loan provides short term out right financial solution. It has a slightly higher interest rate than credit cards on a monthly basis, but you can save yourself from paying accrued interest rates by paying on time, on your next pay day of course. A payday cash advance has its limit. A lender will only provide as high as $1500 per loan application. This is feasible enough to cover your emergency financial needs. For example if . Because, payday loans are paid off automatically by deducting the amount from your checking or bank account, you are tied to your responsibility as the borrower to pay off your loan.

This is where a payday loan ranks higher than a credit card. A person will not be tempted to skip paying the full amount, because an agreement will have to be established between the lender and borrower and that the loan plus the interest rate, will be paid on the next payday. This is a requirement by all payday loan companies.

On the down side, if you need to obtain cash while in the middle of an emergency, say for example, getting short on paying for your grocery, then the payday loan is not an alternative. Here is where credit cards come to the rescue. Credit cards can be good as cash. Credit limits may vary between $500 to as high as $1 million dollars. Credit cards boast of lower interest rates. But it encourages people to go on a spending spree since you can buy almost anything with your credit card.

Sure you can pay the minimum amount due each month, giving you control over how much you intend to pay off, in which case, you do not feel pressured to meet up with the payment due. But in the long run, interest rates will pile up, add in finance charges from the prior amount due, then you are actually lugging about interest rates bigger than what you paid for.

According to statistics, borrowers end up paying sizeable interest rates on credit cards. So if I have to put in my 2 cents worth, you are better off with payday loans, if an emergency comes about.

Each alternative has its advantages and disadvantages. It is up to the borrower to think about the most effective solution to his problem. It is best to look at these as a way to help you get through your most immediate financial need and not as a way to buy that coveted leather bag or dining at that expensive restaurant.

These things can be so much more rewarding if settled using your savings because then you know that it was hard earned. It takes the burden off your mind of where to get the next cash to pay off the next loan. Make sure to choose wisely and spend carefully. You’ll never know when the next emergency decides to knock on your door.