In the left corner, we have the credit card advances: a short term loan product that is offered by most credit card providers and a way to get money quickly at a high cost. And in the right corner, we have payday cash advances – another high-quality short-term loan that is available to borrowers in difficult financial situations.
It looks like a uniform pairing. Let’s see which of these expensive loans has what it takes to complete the 12 rounds and get the title of the most dangerous loan.
Round 1
A payday cash advance is a small and expensive loan with which people get their next paycheck. To obtain a payday advance, a borrower gives a check to his lender or accesses his checking account. The check refers to the amount you borrow, plus interest and additional fees. The borrower then receives a cash loan, which is usually due in two weeks or the next payday of the borrower. These loans are violent and come from the corner.
However, cash advances on credit cards will not go down without a fight. This type of loan deducts money from your credit card balance. This can be done at an ATM or at a bank counter. There are usually several fees and interest is also 8.5% higher than for normal credit card purchases. [1] It is these high-interest rates and fees that make credit card advances a formidable adversary.
2nd round
Payday cash advances are processed in sequence by credit card cash advances. If you withdraw money with your credit card, you don’t expect an average annual interest rate of 15% … rather than 23.54%. Sting. You will also see additional charges such as “finance charges” or “ATM charges”. Sting. But payday advances don’t seem to be stifled by these bumps.
Now payday advances are launching round bumps. The average annual interest rate for prepayment for a payday can range from 390% to 780% depending on where you live. Different states have different laws and regulations for payday loans. But the average payday borrower pays more than $450 to borrow $350.
Round 3
The most dangerous aspect of a credit card advance is the grace period … there is none. This means that interest accumulates immediately. It is the powerful uppercut of cash advances on credit cards and it reduces payday advances. But not a lot.
Pay breakthroughs reappear, he spits out his mask and continues to fight harder than ever. Payday advances are actually used by borrowers through a practice known as “reinvestment”. Transferring a loan means that the lender extends the loan for an additional period and charges additional fees. 76% of payday loans are taken out within two weeks of a previous payday loan. And the people who use these loans get on average 8 to 13 loans per year from the same lender. This is an impressive stream of punches, left hooks, and top cuts. It seems that these two have trouble stopping!
