Credit Cards or Payday Loans
If you need money for a project, holiday or for refinancing small loans or other payment obligations, you may consider acquiring a credit card or raising a payday loan. Let’s look at what speaks for one and what speaks for the other in the case of different intended uses.
Travel on vacation
If you want to go on a holiday, there is a lot to talk about using a credit card. If you choose a credit card without an entry fee and without an annual fee (You release these costs from all the cards we write about on – Compare credit cards ). You should also choose one that takes a low fee, or no fee, for withdrawing money from ATMs abroad and having travel insurance including you should use the credit card to pay over 50% of the transportation cost of the holiday. The credit card from Norwegian not only offers travel insurance, but also provides cashback on flights with the company. If you use the card correctly, it works very correctly and use a credit card for vacation.
Refinance the small loan
If you have several small loans and outstanding credits that you pay off over time (several months), it may be worth collecting everything in one loan. If you have a mortgage today and the opportunity to increase this, it may be a good option for collecting debt at low interest rates. Otherwise, there is much that speaks for using a refinancing loan with up to 15 years’ repayment period.
It is also possible, as a last resort, or as a temporary solution, to collect debt and payment obligations on a credit card. However, this does not pay off over time as usually much lower interest rates on a loan than on a credit card.
Another thing that speaks for using a loan is that it is possible to collect more debt due to a higher loan limit. While a credit card often has credit limits of between NOK 10,000 and NOK 100,000, you get refinancing loans up to NOK 500,000.
Short-term loans – For example, a little in arrears with bills
If you only need some money in a short time, a credit card is often the right choice. Several credit cards operate with interest-free credit for up to 40 – 50 days. This means that you can borrow money from the credit card free of charge until you receive a salary or other money in the account. Make sure that there are quite high fees for withdrawals from ATMs and that interest rates often run from day one when withdrawing from an ATM. It is usually by purchase of goods that the interest-free period applies. You can check this in the price list for your credit card. Most cards also have an invoice fee. If you have a credit card, you know that you always have the security that you can borrow money with the card if you should end up in the same situation again.
Borrow money for other consumption
If you need money for other consumption you should be aware that the biggest difference between payday loan and credit card interest and amount. Credit cards are good for borrowing money in a short period of time (1 to 2 months) and many cards are good at trading everything from gasoline, clothing and travel with due to offers, cashback and bonuses included in the card.
payday loans on the other hand can give you larger amounts and lower interest rates on repayment over time. payday loans are paid down over up to 5 years. payday loans usually have interest rates down to half of what is common for credit cards.
Before you either pick up a payday loan or order a credit card, it is important to be aware that the money you spend and the borrower will be repaid. Obtaining new credit cards and raising payday loans to pay off others can be a way into a bad debt spiral. Also, think about whether you can rather save money over a period and get the same experience, just cheaper and a little further ahead.