Friday, November 16, 2018

Pros and Cons of Credit Card Debt vs. Payday Loans

Pros and Cons of Credit Card Debt vs. Payday Loans


The good news about having money problems, if there is any really, is that there is more than one potential solution. Most any working American in need of money to pay the bills and cover other costs can find one or two ways to get that cash. There are more options than most realize, but they are not all the same. Two common ways people cover expenses when low on cash are credit cards and payday loans. Which is better?

Pro – Credit Cards Are Fast and Easy


The main advantage of using credit cards is that they are easy. Yes, you get into credit card debt when you use them, but you get immediate gratification. You can pay your phone bill, buy groceries, pay the rent, and put gas in your car with credit cards, instantly. This is a great benefit, but there are some serious downsides too and these are often much worse than getting payday loans.

Con – Carrying Credit Card Debt


Credit cards may be easy and fast to use but they cause you to get into debt, often for a long time. Credit card debt into the thousands of dollars is not uncommon. Many people get into this situation because credit card companies encourage it. They want people to stay in debt, only ever paying the minimum amount due each month, because it’s how they make money. They get you to pay interest for months and years, just for the pleasure of carrying the debt.

Con – Credit Card Debt Makes You Overspend


Another disadvantage to carrying credit card debt and using your cards for purchases and bills is that it leads to overspending. There is some psychology at work here, and when you can’t see the actual money you’re spending you tend to buy more than you need or can afford. And it doesn’t have to be anything big; it can be an accumulation of small items, like extras at the grocery store that add up to a lot over time.

Pro – Payday Loans for Only as Much as You Need


A huge advantage of turning to payday loans instead of going into credit card debt is that you only borrow as much as you need. This means overspending isn’t possible. Instead of a line of credit, you get exactly the amount you need for rent, overdue bills, or any other expense. This gives you better control over your finances and your spending habits.

Pro – Payday Loans for Short-Term Debt


Another big pro for payday loans is that these loans keep you in debt for only very short periods of time, as compared to long-lasting credit card debt. You are expected to repay these small loans with your upcoming paycheck. You get the amount paid off with the cash you get from payday and you’re done with that debt. You benefitted from the loan and then the debt is gone. It’s a win-win, and it’s often a better choice than turning to credit cards.