Are Payday Loans and Cash Advances Better than Credit Cards

Consumer Federations of America (CFA) has revealed that payday loans cost much higher than bank loans or credit cards. CFA states that shady lenders charge about 30-60% interest on loans, which could shoot up to 425% of annual interest upon one time renewal. It is true that the rates are exorbitant when compared to other regular loans. However, one has to analyze the cause and effects before concluding a thing as social evil. Since cash advance is much smaller in amount and is quickly repaid upon the arrival of next payday, it doesn't add burden to those who are prompt.

It takes a good amount of time to obtain credit cards and after all you are in need of quick money. Although there are instant credit cards offered at the internet, you need to maintain good credit report in order to apply for these credit cards. Credit card companies also have various terms and conditions which you should qualify yourself before applying for credit cards. Whereas, cash advance and payday loans are easy to obtain whatever level of income is or however bad your credit score is.

Since the amount borrowed is well within your income limits and the time to repay is short, you really get the great benefit of clearing your debts on your next payday. But, credit cards in the name of grace time extend your repayment time only to trap you in to deep debts sooner or latter. Pay day loan lenders make it quite obvious when it comes to interest rates and repayment time, but even the best credit card companies levy great amount of charges that are often not made clear to the borrowers at the time of issuing credit cards. Since borrowers are interested in quick money during times of urgency, they seldom read the fine print and accept it without knowing the consequences at a later stage.

After all most Americans are only in need of small sums to meet the urgent expenses and payday loans come handy to them. The trouble never ends with credit cards because you will be every time tempted to make an unnecessary purchase every time you hang around, but you can have a better control of pay day loans when compared with credit card borrowings. One other advantage of cash advance is it is a direct dealing and involves no risks. However, beware of loan sharks that can drain your hard earned money. With so many scams and phishing sites in the internet, there is a possibility that you might have to pay bills from credit card companies through your nose for the money you hadn't borrowed at all!

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