A credit card is a sort of financial tool that provides quick access to a loan you need to pay back within a fixed repayment period. Frankly speaking, borrowers do hold a pretty controversial attitude whether credit cards are helpful or detrimental. Some of them tend to believe that credit cards are one of the most convenient instruments to cope with daily expenses, while others consider them as an incarnation of the devil.
In this article, you may find everything you need to know about credit cards and get the full benefit from them without being victimized by financial traps.
Beginners are not pretty welcome!
Some credit card issuers offer different kinds of rewards, 0% interest sessions and advantageous perks for borrowers with a good credit rating. Nevertheless, these kinds of cream of crop instruments are not for everyone, as you need to be a borrower with an excellent or good credit rating (at least) in order to get the most out of credit cards.
If you are one of those who hold a bad credit score or even have not experienced a credit history at all (in this situation, these two happenings are almost equivalent), you can find some loopholes and get better terms.
- Apply for a student card (of course, if you are a college student),
- Apply for a credit card secured by cash deposit,
- Cosign a credit card with a good credit rating holder.
Request a Secured Credit Card!
Credit cards backed by a cash deposit are one of the best tools for borrowers with impaired or no ratings. If secured credit cards are in your interest, first off, you have to put a deposit in your bank account equivalent to your credit line. The credit issuer secures his credit and keeps the funds in the case of nonpayment. Be very attentive to your monthly installments, as if you fall behind the set repayment plan, you can easily lose your money. Whilst, as soon as you always cope with your monthly repayments, you can simply benefit from it and build a good credit rating and increase your chances to get approved for an unsecured credit card.
A Shiny Tip: Don’t confuse secured credit cards with prepaid debit cards. Usually, when you use prepaid debit cards, you need to top up your account with your own funds, as your expenses will be deducted from your balance. Moreover, prepaid debit cards do not influence your credit rating, as factually you borrow nothing from your card issuer.
A Credit Card can help you build or degrade your credit
One of the most focal reasons why first-time borrowers choose a credit card is to start off their credit. However, a careless behavior may probably bring the opposite influence, as it mainly depends on your skills and knowledge.
Be aware that your card issuer provides reports to the credit bureaus (usually on a monthly basis) about your card activities. Reports do compile important data about you as a borrower, such as information about on-time payments and the range of funds you have already borrowed. As soon as you want to take advantage and boost your credit using a credit card, you literally have to make your monthly installments on time and hold your debt below thirty percent (the most recommended ratio) of your credit limit.
What do you need to consider while choosing between Credit Cards and Payday Loans?
Credit cards are revolving tools, as once you get approved your loan proposal, you can borrow again and again within the limits offered by your issuer. At first glance, it seems like a notable benefit, but it comprises lots of risky points.
In the case of payday loans with quick approvals, you are entitled to obtain a specific amount of cash upon the credit approval. As soon as you want to get more cash, you literally need to make a new request as payday advances are not a kind of rolling credits.
A comparison is everything for the cognition
If you want to clearly understand which credit instrument can satisfy your needs and be applicable to your precise financial situation, you can easily get the answer by comparing the features of both borrowing methods.
Actually, if you are a well-disciplined person who can manage his monthly installments on time without breaching your contractual obligations, then the credit card is what you need to get. On the other hand, credit cards can easily immerse borrowers into a debt spiral and squeeze their wallets for a long while.
Payday credits offered by direct deposit lenders can be more expensive than other traditional loans. Nonetheless, they cannot turn into unmanageable debts, as the caps and limitations on the range of funds and repayment schedules can ensure borrowers against long-term obligations that usually become unreal to reimburse.
Definitely, there are tons of issues to examine while comparing payday loans and credit cards, but it is all about personal preference and the actual needs that you are going to get over using one of these two variants.