Why Credit Cards are Not Always Better

People usually have a few places to turn to when they get in a financial bind. Some people may turn to their relatives and friends, but that can cause a strain in relationships, especially if you need to consistently borrow money or if you're having trouble paying the money back. Other people get credit cards and take out cash advances. Still other people get a payday loan. Many people feel that getting a cash advance on their credit card is the way to go, but there are some disadvantages of going this route. Payday loans are a better choice for some people.

The Disadvantages of Credit Cards

Although many people use credit cards and cash advances to get them through emergency situations, it's not always the best choice for everybody. Getting a credit card takes a little advance planning, while payday loans are available at any time that you need them. To get a credit card, you need to have acceptable credit. If your credit is not what it should be, you may be denied credit, or you may be offered a credit card with a steep annual fee. Payday loans do have hefty interest rates attached to them, but if you're only going to need the occasional loan, it probably doesn't make financial sense to get a credit card that charges a large fee to have.

Credit cards provide a temptation that payday loans do not have. When you have a credit card, you may be tempted to use the card for non-emergencies. While people who use their cards for non-emergencies intend on paying the balance in full every month, that doesn't always happen. When you can't pay off your balance in full every month, you end up going into debt. Payday loans need to be dealt with right away, either by paying off the amount owed in full, or rolling over the debt. For people that don't want to risk getting into long-term debt, payday loans can get people through emergencies without tempting them to take out more debt.

The Pros and Cons of Payday Loans

Payday loans do tend to have higher interest rates than credit cards, but they are meant to be short term loans that you pay off with your next paycheck. You don't have to have good credit, all you usually need is a job and a bank account. You don't have to pay an annual fee to take out a payday loan, you don't have to plan ahead and sign up for a credit card, and you don't have to maintain an ongoing relationship with the credit card company. For these reasons, payday loans are a preferable way for some people to borrow money.