Are Payday Loans Really the Way to Go?

When your finances are on the mind, there are always multiple options that are available when you need to make a decision. For many people, payday loans are a fall back plan when someone is in dire need of money fast. There are other options out there and the more people learn about them, the more they want to contemplate on which route is best for them and their individual financial situation. Once you are well informed, you can then consider whether or not high interest payday loans are the decision you want to make when you need money now.

Credit cards are one of the most popular alternatives other than payday loans simply because the interest when repaying them is significantly lower in most cases. There are promotional credit cards that often have a zero interest policy in place for a certain time frame. When you borrow a certain amount of money, you will still owe that same amount but won’t have to pay interest on it. It is a win-win situation. One other excellent benefit about these zero interest credit cards is that it gives someone an opportunity to pay off some of their debts without sinking deeper into financial problems. It’s like robbing Peter to pay Paul.

There is one problem with credit cards when it comes to comparing them to payday loan options. That would be the situation in which you may have a flawed credit history and a lower credit score then this would make it much harder for you to obtain approval for a credit card. Some credit cards are created with subprime borrowers in mind but these credit cards are difficult to obtain and can also be more costly to use. Another disadvantage of a credit card is that sometimes it is easy to be approved quickly but the issuing process can take a while.

Several credit union agencies have initiated loans that are like payday loans but are for a shorter time frame. Loans in smaller sums can be borrowed from credit unions but must be repaid completely by the borrower’s next pay day. The significant differences between the two options are the interest rates. Though neither of these types of loans offered through credit unions have low interest rates, there is a significant gap between those and rates that are set by the payday lending agencies.

When you consider loans from credit unions, you may find that there are some drawbacks. Currently these credit unions are only located in some areas such as larger cities or in a certain part of towns so the availability is limited. When someone applies for a credit union loan, many of the same credit history checks are done that are used when also applying for a traditional loan from other financial institutions. If you have a flawed credit score, it is possible that you could be rejected to obtain a loan from a credit union too because of past bad debts or being turned over to collections.

When it comes to deciding which of these options is best for you, you need to greatly consider the advantages and disadvantages to each along with your own prior credit history. Those people that are looking for quick fixes may find that payday loans are a good route to take. The high interest rates often scare people off but it is important for you to know that they are possibilities. By outweighing the pros and cons of these options, you will find the best decision for your financial situation that will also keep you from getting any further into a monetary crisis.