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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.
Cash Advance vs. Payday Loans Bad Credit

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

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.…


Are Payday Loans Dangerous?

Payday loans stir up quite a controversy in some circles. To hear some people tell the tale, payday lenders are little more than mafia-backed loan sharks who are out to take advantage of you in your most desperate time of need.

Still, there are those that claim payday loans are a valuable and necessary service. Traditional financial institutions typically aren’t willing to make small, short-term loans to people, especially when their credit is a little bit shaky. So, people turn to payday loans to fix their short-term financial needs.
Are Payday Loans Dangerous?
How they work

A payday loan is a short-term loan. The lender provides you with cash today in exchange for a check dated into the future – typically two weeks. You provide the lender with some form of income verification. The amount that you get back in cash is less than the amount of the check you write, because the check includes the payday loan fees.

So, for example, you might take out a payday loan of $200. You write the check for $235, and it’s cashed in two weeks after you’ve been paid.

What’s wrong with this?

Unfortunately, the short term fix may have long term financial consequences. The terms on a payday loan are significantly worse that the terms on other types of credit. The annual percentage rate (APR) of a payday loan can reach up to 400 percent or more in some places, and is typically at least 250 percent. This puts payday loan interest rates somewhere between 10 and 40 times the rate of a more traditional type of credit.

Even that in itself isn’t always bad for the borrower. The problem comes when the borrower doesn’t have enough money in her account to cover the check that she wrote.

What the borrower then has to do is go back to the payday lender, who is usually willing to give them another loan – complete with another fee. As you can imagine, at a fee of $35 every two weeks the interest on that $200 can add up extremely fast. In fact, you’re looking at an interest rate over 450 percent.

The solution

The solution to payday loans isn’t to shut the businesses down, however. It’s to find other forms of short-term and low-value credit. Whether it’s micro loans, peer-to-peer lending or even borrowing money from your uncle Joe, there are a number of ways to avoid the payday loan jam.…


Deal with a cash gap without a payday loan

Sometimes, you just feel like you’ve run out of options other than a payday loan. You need to pay the rent, and you’ve got a full week and a half until payday. Maybe your car is in the shop, and you need to pay the repair bill to get it out. Unfortunately, you can’t get to work to make the money you need to pay the repair bill, because your car is in the shop. It’s a vicious circle, and you feel like a payday loan is the only way that you’re going to get out of it.
cash gap without a payday loan
A payday loan will help you deal with your cash gap, but it comes at a price. The interest rate on a payday loan can be 300 percent or more. Fortunately, there are some things you can do when you’re facing a cash gap like this without having to turn to one of these high-interest short-term loans.

Here are some ways to close the cash gap without visiting a payday lender:

– Before you’re late on your bill, talk to your creditor. Whether it’s your rent, your mortgage payment or a utility bill, you may be able to extend or delay your payment. You won’t know if you don’t talk to the creditor. Yes, there are likely to be some fees or extra costs, but it’s not likely that they’ll add up to more than what a payday loan would cost you. Some utility companies, for example, have repayment schedules that will let you pay off a given bill over several months.

– Talk to your employer about a paycheck advance. In some cases, your employer may be willing to give you all or part of your paycheck in advance. Employers that do this will usually have a limit on how much they will do it and how often, so find out what your employer’s policies are.

– Hold off buying something until you have cash. If your car is in the shop, consider taking public transportation until you have the cash. Find out about carpooling with a co-worker, or see if a friend or family member will loan you a vehicle or can give you a ride until you can pay your repair bill.

– Use some of your emergency savings if you have it. Just make sure that you pay it back when it’s all over.

– Consider applying for assistance. The fact is that there are private charities as well as government programs that may be able to help meet some of your needs during a difficult time.…


Payday loan harassment stops now?

You ran into some financial issues and decided that a payday loan would be a quick fix. A few quick fixes later and you have found yourself at the receiving end of the payday loan offices buddy Bruno. He keeps calling and calling asking for money. You just want him to leave you alone. Let’s take a look at how to make Mr. Bruno take a hike.

1. Submit a stop calling me letter. Thanks to the Fair Debt Collection Practice Act, you have the right to tell Bruno to leave you alone. It is time to fire up that word processor, or even better that pen and paper, and tell the people bugging you for money to stop calling. You know you owe them money and you really don’t need a constant reminder every day. Once Bruno gets the letter, he is obligated by law to stop. Make sure you request a signature upon receipt. Also know that this does not mean that Bruno cannot take up the pen himself and write you a letter every day.

2. Keep all threatening voicemails. Bruno has decided that he was going to threaten you with some cement shoes and the local river. Unfortunately he did this via voice mail. Save that voice mail. Make note of any calls that you get that are threatening. If you happen to end up in court, you might be able to use these as part of a counter suit.
Borrow the money you need from friends or relatives. It is amazing at how many friends and relatives are willing to help you out of a bind. The easiest thing to do is ask for small amounts of money from people. We all don’t have a Donald Trump in the family, but we almost always have people willing to help us out. You might even find someone has a bit of money stashed away and is willing to pay off that payday loan. Suck it up and ask, you never know who is willing to help you out.

3. Ask the payday loan office for an extension on repayment. When it comes to money, you will find everyone wants his or her share. This is no different with the payday loan people. Ask them for an extension if you know you will be able to pay off what you owe in a week or less. Granting an extension is cheaper than having to deal with a collection agency. Score two points if you can get the payday loan office to keep the interest rate low on top of the extension.

4. Make small payments. When all else fails, make small payments. It might not be paying off the loan, but it shows you are trying to make progress. Bruno is less apt to call if you are making small payments whenever you can.

5. While a payday loan might feel like a quick fix, it rarely ever is. If you find yourself at the receiving end of some harassing phone calls, or a non-stop flow of mail, try a few of these steps. They just might help you keep your sanity in these trying financial times.…


Tips for avoiding payday loans.

Times might be tough, but they could always be a whole lot worse. Job cuts, salary cuts, and high unemployment are all casting a bit of gloom on our world these days. The best part of all this is that you can be prepared for most of this. You can even avoid the temptation to hit up a payday loan service.

Live within your means

Marketing has us all fooled that we need big homes, exotic cars, and big fancy TVs. This is really all a farce. Trying to live up to what television marketers tell us we need is a quick trip to get a payday loan to go buy that new shinny item.

You might be approved for a $200,000 home. Should you really spend this much on a home? No! What the bank says you are approved for and what you can really afford are two different things. Taking the full mortgage amount means you’ll be scrambling for a payday loan when the water heater blows.
payday loans or yard sale
Big homes and big cars all cost big money. Big cars cost more in maintenance and fuel. Big homes cost more to heat and cool. It is not your job to keep up with the neighbors down the street.

Build an emergency fund

The first thing anyone should do is get $1000 into a savings account. Leave that money there. This cash should only be hit in dire emergencies. Your MP3 player biting the electronic dust is not a dire emergency. It is also not a reason to grab a quick bit of cash from the payday loan palace. Save up and get a new mp3 player when you can pay cash from your pocket.

Next is to save up three to six month’s worth of expenses. Start tucking away money into a savings account. You can use this if you are ever laid off. Wouldn’t it be nicer to find a job you want instead of taking the first thing that comes along? Having three to six months of expenses saved up will allow you to do this.

Have a yard sale

You need a quick bit of cash to pay the light bill. It happens. Should you go get a payday loan? Nope. What you could do is have a yard sale.

Are you really going to use that third blender you have sitting new in the box in the attic? Sell that for a few dollars. Even in the dead of winter, you can have a yard sale. EBay is open all year long and it is warm in there. People are always looking for a deal. Selling off your unused items is a quick and easy way to avoid the payday loan office.

Some preplanning now can go a long way. Avoid the temptation of a quick payday loan. It is always a lot of work to look over finances, but it is necessary more than ever these days. Get that emergency fund going and you will find a whole lot of stress goes away. I dare you to try it and see.…