Features of Small Loans Compared to Credit Cards
When choosing between small loans or credit cards, the best choice mostly depends on your particular situation - credit score, how much money and how much time you require. Here’s a side by side comparison of personal cash and credit cards, to help you determine which one’s the best option for you.
Go With Small Advances When:
- looking to consolidate high-interest debts.
- financing a large purchase.
- can afford monthly payments during the repayment term.
Low rates, high borrowing amounts, and fixed repayment terms make these funds a great option for consolidating debt, paying off an immediate expense, like a medical bill or car repair, as well as covering larger purchases like a TV set or a motorcycle.
How to Pre-Qualify for a Paycheck Advance?
Online lenders have made it extremely easy to check if you qualify for their arrangements. By submitting an online request, you will find out rather quickly if you are the right candidate. Pre-qualifying is a vital step in the cash acquisition process because it opens access to your potential terms, interest rate, amount, and payments.
What to Look out for When Comparing Lending Offers?
The range of interest rates on these advances generally starts at 6% and goes up to 36%. Borrowers who enjoy good or excellent credit scores may qualify for the lower end rate of that range. When comparing your offers, do your calculations and have an estimate of what amount and interest rate you are lucky to qualify for.
Small Loans vs. Revolving Cards for Debt Consolidation
If you’re looking to consolidate your debts to pay less interest and get out of debt faster, you can use both cash advances and credit cards. However, keep in mind that these services work differently in this scenario as well.
When you choose options to reduce a large amount of debt, a consolidation loan with fixed payments may be the best approach, only if you manage to get a lower rate than what you pay on your existing one.
When you choose a balance transfer credit card, you better have a smaller amount of debt and good credit. A balance transfer card lets you consolidate debts to one card with 0% introductory interest for up to 18 months. If you don’t pay off the balance in full before the period expires, you risk getting hit with interest on the remaining balance you didn’t pay of, along with retroactive interest on your initial debt amount.
Credit Cards Are the Way to Go If You Are:
- looking to cover smaller expenses.
- able to pay off your balance in full every month.
- qualifying for any promotional offer.
Credit cards are notoriously expensive forms of financing service when you can’t pay off your outstanding balance in full each month. They generally don’t go under two-digit interest rates, thus carrying a balance from month to month can impact your credit score and budget negatively. With higher interests and risks of dragging a high balance for a long time, this form of financial service is only suitable for purchases you can pay off in full right away.