Cynics have always criticized the impact of fast online payday lenders and creditors on household budgets. However, the fact remains that these companies keep on growing along with the number of fresh applications. Statistics show that young adults now depend less upon their credit cards and more on prepaid money cards whenever they are in need of cash. No two situations are the same, and no matter what choice one makes, people should always protect their bank accounts.

There is no dearth of negative stories about third-party money sources. Every now and then we hear about fraudulent companies posing as real lenders, phishing attempts, stories of default debt, and more. Plus something that almost never fails hitting the news is how these debts are causing problems to several households. Many even advise to refrain from debts and improve credit scores.

Considering third-party money as a demon in disguise is a heavily biased perspective. If you look at it with an open mind you can see the various benefits that it brings. The most important advantage is that it provides emergency fund when you need it the most. When you hit a situation when your income no longer supports certain expenditure, using this facility can mean a big relief. Moreover, this keeps your bank account intact for the time being and even buys you some time to figure out a financial plan.

The main problem seems not the loan itself but paying it off. Sadly, no one reports a story when a lender or credit card saves the day, but undoubtedly that does happen. The real negative effect is felt only when the borrower fails to pay off the debt on time and lets it sit so long that the interests keep piling on, making the total sum beyond reach. If such a situation arises, something should be done immediately to pay off the debt.

It is very wrong to blame online payday lenders or loans for causing havoc on the financial scenario of a household when interest keeps accumulating. The story would be the same no matter what is the source behind a long-term interest. Unless and until money is invested on essential debt such as a house or a car, a person is only putting his/ her money on something that has no return, namely, a lender.

Typically, the interest rate for credit cards is lesser than short-time loans. However, even this is changing very fast as the rates for creditors are on the rise. Once a person has a bad credit history, very high interest rate is applied and thus it becomes very difficult to pay off a large balance. On the other hand, short-term loans even with similar interest rates are easier to tackle because the balance may just be a few hundred dollars. For instance, a credit card loan that charges thirty percent interest rates for a balance of a few thousand dollars will definitely be difficult to repay as against a short-term loan where you can borrow lesser amounts even when you pay similar interest rates.

The key to using third-party money successfully is to be responsible. The best thing to do is to make sure that you never miss a payment schedule. Paying the debt off within the first pay period will save you from accruing interests. It is difficult to plan for emergency, but saving for such unknown situations is always good. If you focus on drawing up a budget that takes such situations under consideration, you may be able to manage without resorting to third party money. However, in case taking a loan becomes unavoidable, make sure to have a plan by which you can pay off the debt as soon as possible.