If you need to access money to cover unexpected bills, medical costs, car repairs, or an upcoming trip, you might consider which is a better way to borrow funds: payday loans vs credit cards. Choosing between the two can be tricky. Read on to learn their differences and why one may be a more suitable borrowing option for you.
What is a Payday Loan and How Do They Work?
Payday loan is a small fund used to cover urgent expenses and then paid off on your next payday. Getting a loan before payday allows you to pay for things that pop up suddenly and cannot wait until your next wages.
Here are some of the benefits (pros) a payday loan offers and drawbacks (cons) worth keeping an eye out for:
Benefits of a payday loan
- Set borrowing amount. If you know exactly how much you’ll need, you can set the amount to borrow.
- You don’t need a perfect credit score. Quickle specialises in payday loans and would just require you to provide your ID and recent bank statement to assess your eligibility.
- Payday loans can be paid out right away. Short-term payday loans are designed to be paid out within 24 hours.
Drawbacks of a payday loan
- Extra fees. These other fees could apply and add to the loan’s total cost.
- Effect on your credit score. If you’re not able to make repayments on time, it could have an impact on your credit rating.
What are the costs of a payday loan?
With Quickle, an establishment fee of 20% of the loan principal will be charged at the start of our payday loan. On top of this is the monthly ongoing fees of 4%. You can go to our Costs Page to check for further information.
Can I get a payday loan on benefits?
While some banks and credit providers are reluctant to lend money to applicants on benefits, there are some lenders that are happy to do so. One of which is Quickle.
Quickle works with lenders and credit providers who can help you with your funding needs. Simply fill out our online application form and provide your identification and recent bank statement.
We will refer you to a suitable lender who may be able to help you with a finance solution based on the information you provided. If you’re approved, the funds will usually be in your account within 24 hours.
What is a Credit Card and How Do They Work?
A credit card offers borrowers access to funds up to a certain limit. They’re useful for monthly bills, daily expenses, or smaller purchases that you’ll be able to pay off monthly.
The following are some of the benefits a credit card offers and pitfalls you should be aware of.
Benefits of a credit card
- Useful for small or daily expenses. Credit cards can be used where electronic payments are accepted.
- Flexible repayments. Make a minimum monthly payment or pay off the balance in full if you want to avoid paying interest.
- Option to earn benefits and rewards. You may also be eligible for perks such as free travel insurance or bonus points redeemable at selected retailers.
Drawbacks of a credit card
- Cards come with set limits. It is less ideal for very large borrowing.
- Interest and fees can accumulate. If you only make minimum repayments, you’ll likely end up with extra interest charges.
- Impulse to borrow more. You are prone to get trapped in a debt cycle.
What are the costs of a credit card?
Most lenders charge annual fees, as well as interest, on their credit cards. Interest rates tend to be on high. However, you may not always be charged interest depending on how you use your credit card.
Usually, credit cards come with a monthly interest-free period. If you make a purchase using your card and repay this amount before the interest-free period ends, you won’t be charged interest. Otherwise, you’ll be charged interest on the outstanding amount.
How to pay off your credit card sooner?
Having debt on your credit card can be stressful. Here are some tips on how you can pay off your credit card faster, save money, and reduce your worries.
- Pay on time. Do this to improve your credit score.
- Pay more than the minimum. Avoid paying extra fees or interest.
- Lower your credit limit. Practice discipline over your spending.
- Keep track. Monitor the money that comes in and out so you can take control of your debt.
The Verdict – Which is the Better Option?
If you have decided to go for short-term lending to solve your urgent need for cash, your choice between a payday loan vs a credit card will depend on some important factors.
A credit card may be suitable for you if you can stay on budget and have discipline and control over your spending. However, a payday loan is your best bet if you need to finance a big purchase or expense, and you’re unable to pay off the debt immediately.
Whatever you choose, remember that they’re both debts. Before you borrow money, consider whether you really need it now and you can make repayments on time. And don’t forget to always read the terms and conditions of any loan or credit card you apply for.
For your funding needs, Quickle is here to assist you with your loan application and provide you with useful tips on how to keep your finances healthy. Apply now!