●Credit cards
A credit card line of credit offers lower limits than loans. However, when you make a “one-off big-ticket purchase” with the capacity to readily manage the monthly installments, these provide a cheap financial solution, especially when you opt for the 0% APR limited time offers.
Another option in the credit card family is the “money transfer credit option.” With these, you can transition cash from the card into your banking account and use those funds to repay current debt. The choice is one option of consolidating debt without the need to take out a personal loan.
With a line of credit, there is more flexibility than the terms associated with a personal loan. The approval process is more relaxed, plus it can be more affordable. It’s not without cost, however; there is a fee for the transfer, equating to a percentage of the funds transferred.
It is suggested to use a money transfer instead of a traditional credit card because these offer lower rates compared to balance transfer cards, allowing you to transfer debt from other cards to a 0% interest card to be repaid within an introductory period.
The balance transfer card doesn’t allow funds to go into a bank account, however.
Learning the fees attached to taking cash from any credit card, including a money transfer card, is vital. Some might allow a money transfer to the bank online with no charge attached.
A cash withdrawal from an ATM has the potential for exorbitant fees referenced as “cash advance charges,” with interest accrual likely instantly on these balances.
That means the cost of taking a cash advance is greater than the money you borrow, making this an exceptionally expensive option for obtaining funds.
● A bank overdraft
The overdraft center with your traditional banking account can be a relatively affordable choice when borrowing cash. On the other hand, it can be exorbitant in cost and a poor value when borrowing funds that exceed the limit you have arranged with your financial institution.
The reference for the limit you agree to is an “arranged overdraft.” When you exceed that amount,” it’s referenced as an “unarranged overdraft,” garnering excessive interest and fees depending on the financial entity.
It’s unwise to take this measure with the ideology that the account will work itself out. You should first research the terms to determine what fees will be attached when you take this action.
Most bank websites will detail the terms and conditions of overdrafts, plus you can refer to your statement to learn the facts. If you need few funds and only for a brief period, this might deem a cheap, straightforward form of borrowing, but otherwise, it can be pretty steep.
Final Thought
Ideally, you want to do due diligence in researching the different approaches to borrowing money to see which form will satisfy your goals.
All providers will take into consideration your credit and financial profiles. That means you will want to check that these are satisfactory before committing to any method. View this for details on deciding if a loan is right for you.
It might become necessary to pay off some debt and improve your credit if you have the time and the means to do so. Doing that will help lower the interest rates on most loans and get approval for a line of credit.
When borrowing money, a primary consideration is ensuring the funds are a necessity and that you can readily afford to repay the money and do so comfortably.
Chloe Jacobs
