There has always been a long debate on whether payday loans are better than credit cards. Most people are more inclined to taking up payday loans because they are more convenient and easy to obtain. There are many risks involved with both payday loans and credit cards. They are both convenient for emergency situations and quick financial fixes. People have always been debating on which loan option is better than the other, here are some comparisons to help you determine the best option
The access of the loan
When you have a credit card, you can simply access it by using it to pay for your everyday bills. If you do not have a working credit card, you can apply for one in a credit card company. It may take around two weeks to get a fully recharged credit card that is ready to use. For modern banks, credit cards will take a few hours.
Accessing a payday loan is easier. All you need is a national identification card or driving license to prove you are a citizen and an active bank account where lenders can deposit the money.
How much do you get and how do you pay it back?
When you borrow form credit cards, you receive a large sum of money but the lender does not expect you to make the payments immediately. They create a payment plan where you make the payments after a period of time. You can use this time to save up money for your income and make the payments faster. Their payment methods include yearly, monthly and quarterly payments.
For most payday lenders, the government has a minimum and maximum limit set up. The amount of money you receive will depend on the terms of the lender. The payment period can be between two weeks and three months depending on the lender.
How you use the funds
You can access a credit card for quite a long time. Most lenders have terms that allow you to use it for around one to three years. Around that period, you won’t have to pay for another credit card when you are in need of the money. Credit cards can be helpful when you have financial emergencies like bills.
When you want a payday loans, you will have to apply and wait for the approval. This happens every time you need the loan and you have repaid back the previous payday loan from the lender. You are free to use the money as you wish once it is deposited in your bank account. The repayment is fast depending on the terms of the lender
The interest rates
The interest rates on a credit card are added to your account periodically. The rates are added to the payment balance so that you can clear a portion of the loan and interest rates every time you make some payments.
The interest rates on a payday loan accumulate immediately the money is deposited into your account by the lender. You have to make the full payments of the loan and interest rates before the deadline.