Payday Loans and Unsecured Cards: Which is Better?
In your quest for payday loans you have an option to take into consideration unsecured or secured credit cards for debtors. Credit cards online may have high interest rates and fees on late charges; in spite of that, if you pay back the debt before the grace period, you will pay less than what you would pay on a payday advance.
A number of online card providers offer a range of credit lines, which may ask you to pay a small fee upfront on the card. This means that if you have bad credit the lender may ask you to pay fees prior to using a fixed amount on the card. For example, the lender may offer $250 line of credit, which roll into the credit card. You will then pay $172 prior to utilizing the card. As soon as the fee is paid, you will have $250 every month to pay late fees, overdrafts, or other bills.
Here are some examples. Let's assume that you have an overdraft and the amount due is $100. The check is bouncing; therefore the bank has charged you a fee of around $31-35. The bank will continue to charge a late fee per day, which at the end of the week could be to $35.
You need approximately $165 to cover the overdraft. Therefore, you get a payday loan of $200 and agree to pay back $240. This amount includes the payday fees and loan amount.
The payday due date arrives and you do not have the amount as well as the fees to pay back the loan. The loan is rolled over another 14 days, and you give $40 to extend the loan. Now you have paid $80 to evade extra charges on overdrafts. In spite of everything, you have a savings. If you roll the loan once more, you will increase the rate to $120, and you still have a saving.
The cycle goes until savings are no longer in the picture and now you have overdrafts and cannot get another loan until you pay the first loan off. You can go to another provider, but you might be rejected if the second provider sees on your bank statements that you have a pending payday loan.
On the other hand, if you have $250 on a credit card and wrote a check that bounced equaling $100, using your credit card to pay back the late fees, you will have $95 remaining on your credit card.
The grace period is 21 days on the card, which gives you plenty of time to get $165. Once the grace period ended and you only have $100 to apply to the card, which means you will roll over $65. The annual percentage rate on the card is 13.99 percent and the late fees are 9.99 percent. You will likely pay $88 on the loan, yet you have 21 days to pay $88, which will balance out to
$23.98 paid resulting from overdrafts.
If you can see, the credit cards are better option than choosing payday loans to take care of incurred overdrafts.
Author: Alex Fir
Author Bio:
Alex Fir
Alex Fir is a journalist that has specialized in the medical, beauty and business issues. He has written a wide variety of press releases, web content, articles, reports, newsletters and more. He runs several highly successful web sites.
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