Payday loans have taken over many online financial services. More people are using payday loan services compared to other services including credit cards. Even though credit cards have been here longer, payday loans are more convenient and easy to get. You are more likely going to get an approval for a payday loan than for a credit card. Both credit card and payday loans can be very convenient when you are going through financial emergency situations that need immediate attention. There have been endless debates and comments on which of the two services is a better option. Check out this detailed comparison of the two services.
When you have money on your credit card, you can take it out. For most credit cards, you will use it to pay for your goods and services. With a payday loan, the money is usually transferred to your bank account or wired to your phone; you can make a withdrawal through an ATM and use the money as you please. You can make a quick application for both payday loans and credit cards at anytime from anywhere as long as you have access to the internet. In the past, credit cards would take up to two weeks but now they are as fast as payday loans.
The time frame
Credit cards have a longer access compared to payday loans. Depending on the type of card you take, you can have the card for up to 3 years. When you complete all the payments, you can apply for another card from the same lender or take one from a different lender. You are not restricted to one credit card during all that period.
Payday loans are different; the deadline is set up at about two weeks to one month. When the loan expires and the payments are not made, you won’t be able to receive any more money from the lender until you clear the debts.
The interest rates
The interest rates on a credit card are added to your monthly payments. This means that that they are not fixed and for most credit cards, hey will continue to grow until you clear all the payments. There are no outside charges imposed on your credit card. With a good credit report and history, you can get higher credit card rates at lower interest rates.
The interest rates on your payday loans will accumulate almost instantly. When you receive the funds in your bank account, the interest rate is usually imposed. You will have to make the payment for the principle amount and the interest rates before the deadline. If the payments are not on time, the interest rates will start accumulating until you clear the whole debt.
The difference in amount
For credit cards, you will receive high amount in loans which are not expected to be paid back almost instantly. Since the payment deadline is set to a couple of years, you can make monthly or yearly payments until the debt is cleared. Payday loan lenders have a maximum loan restrictions set by the government. The time period set to clear your loan is within two weeks and a month.