Business

Payday Loans vs Credit Cards

By Christy Bella | October 19, 2021

Table of Contents

A microloan is quick financial assistance in any life situation. If you run out of money but the balance on the card is zero, then an instant micro-loan can save your life! If you live paycheck to paycheck, then a payday loan is a good choice! Still, which is better to choose: payday loan or credit cards?

How Convenient Is The Bank To Offer Payday Loans?

Commercial banks are financial institutions that accept deposits and provide payday loans to individuals. The strength of banking organizations, such as Moneyzap.com is the ability to provide payday loans for any amount and the term as their reserves are practically unlimited. However, it is not very convenient to get a loan to get a small amount:

A bank is reluctant to issue payday loans to all potential clients. One way or another, it is more interested in large sums.
Registration of a bank payday loan takes a lot of time and effort. It will be necessary to provide a lot of documents to the department, some kind of collateral, or solid and reliable guarantors;
Working hours of the branches are strictly limited to take a payday loan at night, on weekends or holidays it will not work;
Early repayment of a payday loan deprives the bank of interest payments. Most likely a client will have to pay an additional commission.

MFO and Money Online to Card

Microfinance organizations are legal entities that provide consumer microcredits to individuals. Among the disadvantages of cooperation with MFIs, it is necessary to note the small size of the amounts and the short maturity of the payday loan. A cash loan can be arranged for up to a maximum of 30 days.

However, the advantages of acquiring a payday loan significantly exceed all the disadvantages:

Minimum number of refusals: an online payday loan without refusals to a personal account can be afforded by freelancers, students, temporarily unemployed people, and even retirees;
Round-the-clock work: a payday loan online without refusal can be taken on the card even at night;
Instant processing: from the moment of registration on the site to the receipt of money on the card, it takes only 10-15 minutes;
Work online: the application for a payday loan and the filling out of the questionnaire is carried out online, through an application on a smartphone or an MFI website in a laptop without annoying phone calls from managers and specialists;
you can take a payday loan only with a passport and TIN, without a certificate of income and other unnecessary pieces of paper;
you can close your payday loan debt ahead of schedule without paying a fine;
if there is not enough money to repay the debt, then a payday loan can be rolled over any number of times.

MFI is an ideal solution to get an urgent online loan without refusal on your bank card. A higher interest rate than in a bank is justified by the fact that microfinance companies are thus forced to insure their risks from issuing payday loans to a wide range of clients. In addition, in some online services, you can get instant credit to a card without refusals using a promotional code for just 0.01%.

Main Difference Between Payday Loans & Credit Cards

Payday Loan

A payday loan is a short-term loan that you have to pay off at your next paycheck. Your lender can access and withdraw money from your account as soon as it is credited. Sometimes a payday loan is confirmed by a check on the date of issue.

To get a payday loan you need to meet the basic requirements. They vary from lender to lender. It’s the same with your personal data. These loans usually take a short time to approve. You will get a response the same day. The money will be yours within 24 hours. Again, it all depends on the lender you choose.

The ultimate feature of this type of loan is high rates. Some lenders may charge a huge commission for giving you a fairly small amount. That is why it is so important to evaluate all offers and choose the most profitable one.

Credit Cards

Credit cards are a trendy way to get cash or buy goods without a loan. This year, the number of such borrowings has dropped sharply. This is caused by a reduction in consumer spending due to the pandemic. The interest rate in this case largely depends on your credit score and credit history. In other words, the worse your credit, the higher the commission. As for the specifics, you need to pay off the debt every month. Otherwise, interest is charged on the amount of the debt you carried over.

What Can You Safely Choose?

In such a situation, there is no panacea. This is everyone’s personal business. Risks should play a major role in the decision-making process. On the one hand, payday loans may be the best option if you need money right now and you will cover the commission with your next paycheck. When choosing a perfect loan, you should also consider that the maximum loan amount can vary greatly depending on your state of residence. In some areas, payday loans may not even be available to you. Check your local laws and regulations before applying.

If you don’t want to look for a lender, you can take advantage of credit cards and use an overdraft facility. However, you must understand whether you can repay the debt or not so as not to harm your wallet with additional interest.

How is a Non-Failure Loan Issued by an MFI?

The procedure for obtaining a loan in each MFI is approximately the same. First of all, a user should select the size and maturity of the loan in the calculator of the mobile application or the corporate business website of the company, register, fill out a questionnaire and send an application to a financial company. The bank card to which the money is to be transferred can be either credit or debit. The main thing is an active status and a small amount on the balance sheet for verification. You can pay off the debt in cash or by card through the website or payment terminals.

Both loans and credit cards are viable solutions to get cash immediately. Which one to choose is up to you. Make your decision wisely so you don’t end up in a difficult situation!