A Payday Loan Has Benefits
The payday loan is beneficial only when you use it as a short-term solution to a problem. When repaid on the payday following the loan, it will get you out of a bad situation by providing the emergency funds you need. If you do not have a credit card, or you have used it up to the limit, you may be in danger of eviction or having the heat turned off in your flat. To avoid this, the payday loan is the ideal solution. The high-interest rate is likely not as high as of late fees charged by your landlord or your utility company.
Unlike the credit card, with your payments will going on month after month, your payday loan will be finished in two weeks to one month. You may know how compound interest works. On a credit card, the interest you pay is charged not only on the balance owed but also the accrued interest is added to the balance each month and you end up paying interest on the interest.
With a short-term payday loan, you make one interest payment along with the repayment of the original loan, and that is the end of your debt.
You Can Avoid Ruining Your Credit by Taking out a Payday Loan
It is fast and easy to accrue credit card fees and penalties, which will then have compound interest piled on top of those fees and penalties. If you have reached the upper limit of your capacity, you will be without money to pay the bill and without money to compensate for not being able to charge merchandise you may need.
Avoid accruing those late fees for non-payment on your credit card. Apply for a payday loan, make the payment on your next payday and you will not have to pay interest on the money month after month. The direct debit loan is fast and easy but without the disadvantages of using a credit card for an emergency. Paying the credit card or another bill that may be close to overdue will preserve your credit rating.
A late payment to your credit card company will be a blot on your credit rating for five years. Saving your good credit score is worth any amount of interest paid to the payday loan company. The payday loan will be repaid in two weeks to one month.
If you make a late payment on your credit card, it will linger on your credit record for five years. The advantages of the payday loan far outweigh the disadvantages, which are minimal compared to destroying a clean credit history you may be building to qualify to purchase a home or new automobile in the future.
Payday loan can be great helper on the emergency time. But it can be so risky in some situation. If you have caught in payday trap you can seek help for your payday consolidation from a good payday loan consolidation company. They can solve your problem easily.