Cash Advance vs. Payday Loans Bad Credit
If you need some cash and you need it right now, chances are that you’ve only got a few choices. You might be able to borrow the money from friends or family. If that’s an option, go for it. You’ll be much better off in the long run if you’re able to borrow the money with little or no interest, and pay it back on a reasonable timetable. Unfortunately, not everyone has family or friends to turn to in a time of financial crisis.
Two of the options that people sometimes find themselves facing are cash advances on their credit cards and bad credit payday loans. To know which is better, it’s important to understand how each works and what fees are involved.
Credit Card Cash Advance
The first solution to the cash crunch you might consider is an advance from your credit card. The way a cash advance works is that you get money from your credit card company, usually via a bank or an ATM. The bank or ATM will usually charge you some sort of a fee, which may or may not be billed to the credit card company.
In addition, you’ll have to pay a fee to your credit card company for the cash advance itself. In some cases, this can be as much as $25 just for one cash advance. In other cases, it’s a certain percentage of the cash advance, usually with a certain minimum fee.
Finally, you’ll have interest charges. Once you’ve taken the money in a cash advance, you’ll have interest charges from then on out. The sooner you pay off the cash advance balance on your credit card, the less you’ll pay in fees.
Payday loans are different entirely. With a payday loan, you write a check to a payday lender in exchange for cash today. The amount of the check is going to be higher than the amount of cash you get. This is to cover the fees involved in the payday loan.
The payday lender then holds the check until an agreed-upon date, at which point they cash the check. If you can’t cover the check at that time, you may need to visit the payday lender and take out another loan, along with another fee.
Which is Better?
It really depends on your situation. If you’re certain you can pay back the money within a couple of weeks, a payday loan can be less expensive than a cash advance on your credit card. On the other hand, if you renew your payday loan just once, chances are pretty good you’re going to be paying more in fees than you would with your cash advance.