Friday, February 3, 2012

The Finance Smackdown: Credit Cards vs. Payday Loans

With the state of the world economy in constant flux that does not seem to be turning itself around anytime soon, many people are left with the undesirable option of which way to incur more debt in order to maintain a decent lifestyle, or simply to pay off bills that were incurred in better times.

credit cards or cash Many banks will not lend to individuals who are just in need of short-term personal loans for small business owners who have need of bridge loans of some kind. This leaves an entire segment of the population with the two main alternative ways of short-term self financing ? credit cards and payday loans. This article will weigh the pros and cons of each, and determine once and for all which one is actually better for someone in need of short-term financial backing.

Credit Cards

Self financing with credit cards is definitely the most popular option of the two, as the credit card companies who profit from this sort of debt incurrence routinely spend billions of dollars in order to make people believe that credit cards are the end-all and be-all when it comes to debt. However, if the aftereffects of the real estate bubble of 2008 and the subsequent recession led by the United States and Europe have been any indication, there are more than a few holes in that theory.

However, there are some definite pros to incurring debt on credit cards. The first of these, which is not to be underestimated in any capacity, is the ability to pay off the loan without incurring any interest, as long as you can do it before the term period is up. So if you are looking at a loan term that is less than 30 days, by all means, take the debt on credit cards, pay it back before the end of the month, and you have basically financed yourself for free over that time period.

However, if it is not the case that you can do this, and it usually is not, then you have a great deal more to worry about.

Credit cards usually incur much larger interest rates than payday loans. You are also dealing with a large company that you most likely will have no personal leeway with. That means that the contract that they give you is set in stone more or less, and the punishments will be severe if you do not comply with the rules and regulations that are set forth.

Payday Loans

These businesses might have received a bad rap from all of the billions of dollars that the credit card companies are putting out there to make credit cards seem godlike and payday loans industry seem like the unscrupulous underbelly of the financial services industry. However, if you are able to find the right payday loans business, you can come out way ahead of any loan taken on a credit card.

The main reason that you would want to be involved with the payday loans business rather than a credit card is because the company is more local. You can work out terms that are specific to your needs, and you have a personal connection with the payday loans owner. They might even be a participating member in your community, which would make the relationship that much closer.

Andy helps Australian consumers to compare and apply for a range of credit cards. You can visit his website by clicking here.

Source: http://gvbizinfo.com/credit-cards/the-finance-smackdown-credit-cards-vs-payday-loans/

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