With the variety of ways you can acquire money, the choices can be confusing. For this not to happen, it is important that you know the similarities, differences, and benefits of these ways. For this article, let us take into consideration two of the fastest ways to get a loan - the credit card and payday loans in Canada.
How are they Similar?
In terms of convenience, both types of credit can be quick and easy. A credit card allows its owner instant cashless purchase at all merchant stores and establishments that accept it. There is just one form to be filled in - the receipt - and often only your signature is required. On the other hand, payday loans in Canada allow for almost instantaneous use of the borrowed money. With processing time targeted to within 24 hours from application to loan release and with very few forms to accomplish, these loans are fast and simple.
In terms of interest, both instruments of credit can charge higher rates than most credit facilities. In fact, with any unpaid balance on a credit card, the interest computed is on the total amount due regardless if the former is just a dollar. With payday loans in Canada, the interest on unpaid loan balances can be computed on the original principal. In addition to the interest rate, deferral charges and processing fees are also charged in a rollover.
In essence, you pay for the convenience that both credit instruments afford you. This is a good trade considering that time is precious and money is even more precious.
What are their Differences?
Obviously, for you to avail of the benefits of a credit card, you must have a valid credit card. For payday loans in Canada, you will not be issued a card; a check, yes. The former needs an electronic verification machine to authorize purchases, while the latter only needs your signature on the check or the withdrawal slip to authorize your use.
With a credit card, you will be sent regular statements of account; with a cash advance you will be sent a demand letter should you fail to pay. There is a significant difference between the two since a credit card's grace period and terms are relatively longer and easier, while payday loans in Canada can have stricter collection practices. It can be a choice between paying now and paying jail time. No choice, really.
So, What Gives?
Depending on your needs and circumstance, both credit instruments can be advantageous to you. If you prefer cashless transaction and automatic payment through bank transfers, then a credit card is for you. If you have exceeded your credit limit on your credit card, or if you do not have a bank account, or if your financial status does not merit the stringent standards of banks with regards to their credit cards, or if you have bad credit with other financial institutions, then payday loans in Canada are for you.
In the end, both credit instruments are still debts to be paid. Thus, choosing one over the other can make a significant difference or it might not. The decision to control your finances is still your choice to make. Make that choice now.
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