A Credit Card or a Payday Loan For bad credit

A Credit Card or a Payday Loan For bad credit

Since the introduction of a Payday loan, there has been a lot of debate in regards to whether or not one should opt for a Payday loan or a credit card instead. As many of you may already be aware, a Payday loan has specially been designed to provide short term finance for those individuals that find themselves short off cash towards the end of the month. The money that is provided by the loan is mainly designed to help one pay off any bills and expenses that they may have outstanding towards the months end. Some people feel that the same purpose can be fulfilled if one decides to use a credit card instead.

Even though the logic behind using a credit card for the same purpose makes quite a lot of sense, looking at the technical side of the option is what raises the initial concern. Even though a credit card offers a high credit limit than the amount a Payday loan would be able to offer, what one has to keep in mind is that the money has to be paid back regardless of what option you choose to go ahead with. If you are a new credit card holder, the credit limit that you will be provided with on a monthly basis will be marginally the same to a Payday loan which is around $1000.

The major difference between the two is that with a Payday loan, you will only be required to pay a one-time fee at the beginning of the contract. With a credit card on the other hand, you will be required to make repayments with interest. The danger with a credit card is that you are spending money that you initially don’t have. If paying the capital that you initially spent back wasn’t enough, one has to also worry about paying interest on the capital withdrawn. If you find yourself in a situation where you can not pay the amount spent on a credit card with in a one month period, you will be charged a variable interest rate on a monthly basis. This in effect will only increase your expenses and make repayments much more difficult.

Another problem with opting for a credit card over a Payday loan for this particular purpose is in relation to acceptance. Trying to get accepted for a credit card in the current economy is quiet difficult as a lot rests upon ones credit rating; which due to the recent economic downturn does not seem to be good for the majority.

With a Payday loan on the other hand, acceptance is pretty much guaranteed. To be accepted for a Payday loan, you need to make sure that you are the legal age of eighteen; employed on a regular income by a reputable employer and that you have a current bank account. As long as you can meet all these requirements, you are more or less guaranteed the loan. With a Payday loan, you can expect to have the money within one day of your application being processed.