Payday Loans vs. Credit Card Cash Advances
When you're considering your options fast cash or for short-term loans, it's good to know the difference between a payday loan, and a credit card cash advance. While the two terms are often used interchangeably, they are actually very different. And while one is a reliable, short-term financial option, the other can cause you many problems in the long run.
Credit cards sometimes will give you the option of accessing your line of credit as cash, just as if you were simply taking money from your bank account. But before you choose to access this credit as cash, take the time to understand exactly what it means to get an advance from your credit card. These payday loans can come at a hefty price.
Unlike the flat, one-time fee charged for a payday loan, the interest rates charged for a credit card cash advance are far more expensive than your usual credit card interest rate, with some of these rates well above 20% interest. In addition, you'll typically be charged a flat fee just for getting the advance, then another fee from the ATM you use to withdraw your cash. Compare these numbers with the one-time, flat fee of a payday loan, and you're sure to see a big difference.
When it comes time to pay back your credit card cash advance, you'll again encounter a different set of terms from the terms used when you simply use your credit card for credit. Most companies will force you to pay back any balance you have on your credit card before they will allow you to make payments towards your credit card cash advance. This means that all your payments go towards the balance with the lower interest rate while the payday loan balance accrues the much higher interest. There is no grace period before this high interest rate begins accumulating, so by the time you are able to make payments on your credit card cash advance, you'll typically owe much more than you originally borrowed.
Compared to a payday loan for your short-term money solution, a credit card cash advance is not only much more expensive, but more deceptive. If you don't know exactly what you will be charged, it can be overwhelming to try and predict how much you will owe and work it into your budget. If you need cash, consider a Check 'n Go payday loan instead. There are no hidden fees and no additional charges you just owe the initial amount borrowed plus an upfront, clearly defined lending fee. A payday loan is ultimately not only easier to use, but much easier to depend on.