Why Use A Credit Card When You Can Get A Loan Advance?
Lots of us rely on credit card cash advances when we find ourselves in a budget crunch, but those aren’t your only choice, and they have some drawbacks. To start with, they’re expensive. Not only the 3% you’ll be charged right off the top – added to your credit card balance, so you’ll end up paying interest on it – but cash advances traditionally have interest rates as much as double the rate for purchases. Even more importantly, the financial wizards at the bankcard companies who decide which balances your payments will be applied to always pay the balances with the lowest interest rates first. That means that compared to a loan advance which will be repaid in a month or so, you could be paying those high interest rates on today’s cash advance for literally years into the future.
In addition to the expense, carrying a higher balance on your credit accounts has a detrimental effect on your credit score. We all promise ourselves we’ll make larger payments on our cards for a couple of months and get that balance paid down, but how often do we really follow through? It’s so easy to just keep paying the minimum amount, or just a comfortable amount more, rather than the full “extra” amount we vowed we would. With a loan advance, payments are prearranged at the time the loan is funded, and drafted directly from your bank account so you don’t need to remember to mail a check, or even schedule an electronic payment through your bank. It’s all taken care of for you, and the withdrawals are scheduled for your paydays so as to ensure that they won’t cost you an overdraft fee.
A Loan Advance Is Good For Your Credit Score
If you don’t have credit cards, you might score extra cash by getting a loan from the pawn shop, selling your valuables or extra household items online, but a loan advance has advantages that those methods don’t. For one thing, it’s more reliable, being based on your income and ability to repay rather than the arbitrary value assigned to your belongings. In addition, there’s real potential for improving your credit score using short term loans. You get an advance on your next paycheck or two, to use for whatever you need. The payment is scheduled to be automatically drafted from your bank account on your next payday or two. On-time payments are reported to the credit bureaus, which will over time reflect positively on your credit report and raise your credit score. Since the payments are arranged by the lender and you don’t need to remember to send them or in fact do anything at all, the payments will always be on time and work in your favor. Even after you improve your credit and have credit cards and other options, you might continue to see the value in this type of short term loan: fast and easy to apply for at any time of the day or night, doesn’t require long term adjustments in your monthly budget to provide an additional payment as a long term loan or credit card payment does, and gets the cash to you in as little as one business day. What other methods have this many advantages?