subject: Credit Card Cash Advances [print this page] If you are wondering about cash advances on credit cards and how they compare to payday loans, that is a good topic to discuss. There is one primary difference between the two types of loans, although it is certainly not the only difference. The primary difference to the borrower is the way the two types of loans are repaid. It is a very significant difference and should be considered well before selecting between the two types of loans.
Cash advances on credit cards are repaid in monthly installments over a period of time, and payday cash loans are repaid in a single payment on the borrower's next payday. That's a pretty simple description, and it shows clearly the major difference between the two types loans. If you need a large amount of money and will need time to repay it, then a cash advance on a credit card may be a better choice. If you need a small amount of money for a very short period of time, then payday loans may work better for you.
One thing both types of loans share is that neither requires a credit check. That is also significant. If you have established credit and your credit cards are not maxed out as far as your credit limit is concerned, then use of cash advances on credit cards will be fast and easy, just like payday loans are fast and easy. However, many people find that after they have used their credit cards for a period of time and run up the total balance to its maximum limit, that's when they look around for a payday loan of some kind. It is often a loan of last resort, when other options have been exhausted. Payday loans can work out well for the right people at the right time, but they can definitely prove challenging for customers who are not able to budget for their repayment in a timely manner.
So, what the two types of loans have in common is the fact that neither requires a credit check. But what separates them, besides the method of repayment, is the interest rate charged. Cash advances on credit cards generally result in a lower interest rate than use of payday loans. No matter how high the interest rate may climb on credit cards, payday loans will far exceed are them in cost. Even though credit cards are repaid in installments over a period of time, much longer than the period of days after which a payday loan must be repaid, calculating all the interest paid on the cards will not meet or exceed the interest and fees charged on payday loans. The loan costs at payday lenders is classically the highest allowable by law for single pay loans. Banks and credit card companies must follow different laws and regulations which limit the interest rates and fees on installment loans.
Payday loans are basically a cash advance on the borrower's next paycheck, so employment is one of the universal requirements on loan applications. Once you have an existing credit card, however, and as long as you are making minimum payments prior to the stated due date, there will not be an employment requirement when you get credit card cash advances. This is another significant difference between the two types of loans, and one that you should consider carefully.
Whatever your personal circumstances, you know full well whether you are actually in a financial bind or not. Nobody needs to tell you because you already know. If you need some cash and you need it in a hurry, make sure your purposes for borrowing are necessities, not luxuries. Then, consider your present circumstances and you will be able to select between cash advances on credit cards and payday loans. You will know what to do.
