Are you trying to decide on the type of credit that you would like to take? Depending on your needs, it is worth looking at whether payday loans or credit cards can be a solution that can provide you with the extra funds and the financial flexibility required. Payday loans and credit cards have their strengths as well as their weaknesses and can be used for many different reasons; payday loans tend to be better for the short term to help with an unexpected bill, while credit cards represent more of a long term commitment that can become problematic if you cannot keep on top of the monthly payments.
A payday loan represents a short term loan that typically range from £100 to £1000. The main advantage of a payday loan is the ability to apply and receive the funds on that same day, either via online application or via phone. The eligibility criteria for receiving a payday loan are also broad; as well as being over 18, you need to have a UK bank account and be in full time employment. Payday lenders are also prepared to issue loans to borrowers with bad credit, so long as the applicant can afford the repayment. In this way, a payday loan can be useful for gaining short term and emergency funds that can be repaid within a month.
It is worth noting however, that the benefits of a payday loan can be offset by their potential for risk. APR on payday loans is known to be very high at an industry average of 1737% and you can end up falling into debt if you default on the repayment. You consequently need to be able to take on a payday loan with the confidence that you can make the repayment, and that you are not just applying for a loan for easy money. To learn more about APR please see our "Understanding How APR Works" page for more information.
Another great way to get your hands on some fast cash are credit cards. These cards can be used alongside debit cards to make purchases, and are issued by banks and specialist lenders. The main benefit of having a credit card is being able to make specific payments, while generating bonus points and participating in cash back schemes. Ideally, you only use a credit card for emergencies, or for specific purchases, and repay the balance at the end of the month. Keeping up with the monthly repayments will allow you to avoid fees and will also increase your credit score and eligibility for other loans.
If you do not use a credit card wisely, either by spending beyond your means, or by defaulting on your minimum monthly repayment, then you can quickly accumulate debt. People with multiple credit cards that fail to keep on top of them can end up suffering from high surcharges and significant repayment problems. Credit cards also come with various fees, which range from application fees to balance transfer and limit charges.
If you are deciding between a payday loan, credit card, or if you are considering both, it is crucial to be as responsible as possible with the money available. Credit cards are perhaps best if you need extra money on a long term basis and want to build your credit score; they are also worthwhile if you can make payments every month, and if they can be factored into a budget. Payday loans however, can be a better option if you only need to make one exceptional payment, and want to process the loan and repay it in a short period of time.
Making the decision as to whether you want to use a credit card or a payday loan will ultimately depend on your individual circumstance. There are several things that you have to consider before you make that decision.
How is your credit score/history?: This is probably the first question you will need to ask yourself. In order to get approved for a credit card, the company will run a credit check on the applicant. This means that having bad credit may hinder your chances of getting approved for a credit card. At Swift Money the majority of the lenders that we work with offer no credit check loans, making it possible for you to be approved regardless of your credit score/history.
When do you need the money?: On average, credit cards can take up to a 14 days to apply for and receive the card. You may not be in a situation where you will have the option of waiting the 14 day term. Swift Money will process your loan application very quickly and can get you the cash you need the same day. Sometimes in as little as 15 minutes.
How much money do you need?: With our payday loans, you can borrow up to £1,000. For the purposes in which payday loans are generally used for, this is usually more that what the average borrower are looking for. For credit cards, you will be given a set credit limit that may be below the maximum amount you can get from a payday loan.
Some other things that you should consider is that it is very easy to get into financial troubles with credit cards. Mainly because of the freedom that you have to charge purchases to a card, some people have a tendency to overspend. With our loans, you only borrow as much as absolutely necessary.
Overall, payday loans have proven to be the better option if you need a small sum of money very quickly. Apply for one of our loans today and get the cash delivered in as little as 15 minutes.