I need cash, I need cash fast? How many times have you thought these words? How many times have you said these words allowed. Well, there are millions of people who have thought it, said it and done something about it. The real question is how well did they do it?
When it comes to getting a hold of cash fast, there is a right way to do it and an expensive way to do it.
Payday loans – Credit card cash advance – Overdraft Protection on checking account
Payday loans – The typical payday loan is a loan that is secured by a personal check. The borrower is charged a flat fee for the loan (rather than accruing interest) and that is a percentage of the amount borrowed. These loans are rendered at a very high percentage rate. And if one is not careful, they can find themselves owing more than they originally borrowed in a very short time. So, how does this work?
Let's say a customer needed $ 500.00 to pay a bill that is due tomorrow. He won't receive his next paycheck until Friday after next. So he goes to his local Payday loan company to borrow $ 500.00. The clerk charges the customer a $ 100 fee for borrowing $ 500 for two weeks. That is about 500% interest … not uncommon in this business which preys on the poor. In two weeks if the loan is not paid in full, the customer will find himself making another loan to pay off the original loan, again at a very high interest rate. This could be a spiraling death trap. Payday loan customers should carefully consider their cash needs. If at all possible, seek to make financial arrangements with the entity you owe. If all else fails, look at the following two options before falling back on the Payday loan option.
Credit card cash advance – Credit card cash advance is an option for those in need of cash fast. If you have a credit card with cash advance privileges, this is a more viable solution than a payday loan. Cash advances allow you to use your credit card to obtain cash from a bank or ATM machine. Instead of paying a flat fee for a loan, you are charged an interest rate that is higher than a normal credit card purchase rate. You can expect a minimum of 21% interest on your average credit card cash advance transaction. So, that same $ 500 you needed would cost you about $ 9 when your credit card bill arrived. Make sure you pay it right away so as not to accrue additional interest.
Wow, what a difference, $ 9 versus $ 100. The only problem is that a large number of people have bad credit or may not otherwise qualify for a credit card that would allow them to take advantage of such short notice, short-term loans.
Overdraft on checking account – Another option for borrowing cash fast is using your overdraft line of credit attached to your checking account. This option requires that you apply for a line of credit with your bank and have it attached to your checking account. With the line of credit in place, whenever you overdraw your account, the bank covers your overage and charges you interest on the loan. There may also be a yearly fee for the overdraft line of credit. Also watch out for any fee your bank may charge you for going below a certain limit in your checking account.
When it's all said and done, this loan's interest rate may be less than a cash advance's but make sure you understand the bank's fees. You wouldn't want this transaction to cost you more than performing a credit card cash advance.
Favorable Tip: As with any matter regarding money, you should always practice effective money management. Borrow as infrequently as possible. Save as much and as frequently as possible. Use your savings for the rainy days. But be sure to replenish it as quickly as you can.