Cash Advance VS Payday Loan

Payday online loan is one of the few options whenever you are short on the monthly budget and you need to borrow money to cover the expenses. These are easier and convenient. Oftentimes, these loans are also known as cash advances. Although these two kinds of loans are quick solutions to financial needs, cash advance is another form of loan where money can be borrowed from a credit card. This is what makes one significantly different from the other. 

Credit Score Requirements

Payday loans online typically do not require any type of credit check in order to be approved for the loan. Unlike personal loans and bank loans, online lenders only require their customers to be 18 years old or older. In addition, customers must be currently employed and must have an active bank and checking account. Other than that, these are the only qualifications for applying for the loan. In no more than 24 hours, the loan will be approved and money will be sent immediately. The checking account or active bank account serves as their security in order to ensure that the loan will be paid when it is due. On the other hand, credit card cash advance has requirements before the customer is able to get the amount of cash borrowed. First, you need to get a credit card in order to get a cash advance. Next, credit card companies normally check on the credit score before they can issue their customers one. Keep in mind that only those people who have met their credit standards which vary from one company from the other will be approved.

Interest Rates

Talking about the payday loan, some would consider that the interest rate is quite high. Looking on the bright side, this kind of loan is always ready to cover on the expenses when your money is not enough. However, whenever you have plans in rolling the loan, it is the requirement for the borrower to pay for the fee all over again. Say when you keep on rolling the loan for the entire year, most possibly you will be able to pay a 300% interest. Therefore, before applying for a loan, always be confident that you will be able to repay it off when the due comes. Meanwhile, credit card cash advance usually have interest rates to as low as 1% to 4% of the amount advanced. Sometimes, credit card companies offer flat interest rates. So, it is also convenient for the customers. In addition, customers getting cash advance are required to pay the monthly interest of the balance. 

Which is better? It all depends on the situation. If you have a credit card with an available credit in it, perhaps, it would be preferred to get a cash advance rather than payday cash. Usually, credit card companies offer low monthly payments and low long-term interest rates. Meanwhile, if it is impossible to process for a cash advance, then getting online cash loans may be a solution to the need.