The Differences Between a Charge Card and Payday Loan
Many people use a Charge card when needing extra money or when facing an unexpected Car Repair. A charge card is also known as a credit card. There are limitations to using credit cards. People can usually borrow a certain amount of money. On the other hand, a cash advance does not have a limit on how many times a person can borrow as long as the person’s account is in good standing.
What is a charge card?
A charge card requires payment every month. It does not have a preset limit. Purchases are approved based on credit record, financial resources, payment history, and spending. There is no minimum payment or interest rate because the balance must be paid in full by the due date. If the balance is not paid in full, then there is the possibility of paying late fees depending on the penalties and fees outlined in the agreement.
Some credit cards have a credit limit and may allow users to carry over balances with an agreed upon interest rate. There are cards that come with the option to revolve a portion of the debt. Some companies provide eligible card holders with flexible payment plans that allow for paying transactions over time. However, revolving balances can incur finance charges.
Reasons to use a Charge Card and Who Should Apply
Charge cards build credit history without getting the borrower in financial trouble because the balance is paid in full each month. They also come with reward programs that require an annual fee. The reward program may allow for spending a large amount on your account without hurting your credit score. Getting approved for this type of credit requires having excellent to good credit.
An Alternative Approach – Cash Advance
A cash advance is an alternative to getting approved for credit from a credit card company. It is an unsecured, short-term loan that allows for obtaining a loan within 24 hours. Cash advances are easy to obtain when meeting the basic requirements. Basic requirements consist of being 18 years of age, having a bank account and a steady job. Some lenders may require applicants to be working at their job for at least three months and to be making a minimum of $1000 a month. Applicants can apply for the loan online and usually receive a response within a few hours. These types of companies do not perform credit checks, which means applicants, will not get denied because of having bad credit.
When the application is approved, the money is deposited into the borrower’s bank account. Cash advance amounts can range from $100 to $1500 depending on your income. The borrower usually has until their next pay period to repay the loan. At this time, the finance charge and loan amount is deducted from the borrower’s bank account. The borrower also has the option to extend the payment period, but expect to pay a fee for the company having to wait on repayment.
Many people choose payday loans because they are easy to obtain and confidential. The online process allows for getting extra money without letting family and friends know that you are having financial problems. It is also important to not get a higher loan than needed. Borrowers only have from seven to 14 days to pay back the loan and your paycheck also has to go towards paying bills in your household. If you only need $400, then you should just get that amount instead of the entire approval amount.
Payday loans are an option for getting back on your feet, but should be paid as soon as possible. It helps to stay in good standing with the lender because you may have another unexpected emergency. People can become smarter about money by using good judgment. Some people take out payday loans to take advantage of Shopping sales. There is nothing wrong with getting your child a new pair of shoes for school, but it is important to not borrow more than you can pay back.
Emergencies are different for every household. Some people may need to borrow money for groceries and others may need extra cash for dental work. A Charge card and payday loans serve different purposes, but allow for obtaining extra cash.
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