Credit Cards, Friends and PayDay Loans: Which would you use if you were short of cash?

There are indeed many ways that we simply throw good money away. In my previous post, I outlined seven ways that I have successfully thrown money away over the years. These are the ones I remember! I’m sure there are dozens more that I could think of. There are of course some ways that you can avoid events spiralling out of control, but each of them needs some self-control in that they all have inherent benefits, costs, and risks. But for short term personal loans¬†needed urgently, there aren’t so many options. Credit Card #1

The Credit Card: This is perhaps the easiest way to borrow money, it’s available and easy to access. Just stick your card in the ATM, enter your password, retrieve. Then wait for the bill at the end of the month. The costs though are in the interest rates charged from the date of the loan, ATM fees and perhaps a worse credit score. Worse: this may not be an option if you are nearing your credit limit. The last thing you want do is incur late payment penalties on your Credit Card or overage penalties when you break your limit. In fact, having a safety limit for errors in billing is a good idea. Don’t run your credit card at 100% of your limit! friend next door

The¬†Friend at Work or Next Door: Again an easy option, and one which will rarely attract interest payments as friends are ‘helping each other’. Typically, you’ll hear people saying things like “I had an unexpected emergency. Can you lend me a few hundred dollars until payday?” Most friends will oblige for a ‘friend in need’… and that’s where the problems begin. You can’t pay it back on payday, then you begin to feel embarrassed to see your friend. Every time you see him or her, you feel guilty thinking “I have to pay you back, but I can’t”. Others report that lending money to a friend or borrowing from a friend impacts the relationship. Things never seem quite the same, because money entered the equation. I stopped lending to friends after the problems it caused.

payday The PayDay Loan: A more recent entrant to the informal loan are the payday loans – a short term loan that is designed to bridge or cover the cashflow problems. With this facility now provided on the Internet, the application procedure could be quite quick and easy. Often these companies will provide next business day payment electronically. The payments are due (depending on the conditions of the loan) on the next pay day. The catch: it isn’t free. It’s not necessarily cheap either with fees that can run quite high. Most importantly, though, they are designed as short-term loans to cover short term problems. The fees and interest rates can be expensive, if these products are treated incorrectly. In some cases, though, clients become dependent on these kinds of loans; and can rack up large debts because they fail to read the fineprint or stick to their end of the bargain (the APR rates would make your eyes pop if you were borrowing for 12 months).

Personal Emergency Fund Each of these three methods allows you to get a small amount of cash to cover a cashflow crisis. Each of them has obvious benefits, costs and negative factors. Whichever you decide to use, there’s no doubt that setting aside a little money for your own personal ’emergency fund’ is probably the sanest, cheapest and most effective solution in the longer term. But that won’t help much if your bank account is flashing $0.01 right now. What do you do when you need to borrow some cash fast? Where do you go? What are your good or bad experiences? Do let me know!

Prepaid Cards: Bane or Boon? That depends…

For perhaps the largest selection of prepaid card plans in the industry, you can visit Kaiku (kaiku.com). Kaiku is well known for administrating many prepaid Visa card programs that are responsible for returning many individuals, families and businesses to financial health.

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No matter how much financial trouble you are in, a prepaid Visa credit card from Kaiku will always help the situation. Although the card can be used just like a Visa credit card, the prepaid option means that you will never spend more money than you deposit on the card in the first place. This means that your purchases will still go towards the improvement of your credit score, but you will never face the consequences of a late payment.

Kaiku offers both vanity prepaid cards as well as Visa cards from major banking institutions. You can also use Kaiku in multiple instances with many prepaid cards for different purposes. Kaiku also allows you to add money online with one of the most convenient and up to date deposit systems on the Internet today.

If you do not have the best credit or you are just looking for a credit card option that will protect your financial health, then you should check out Kaiku. You would do well to note that prepaid cards do have a variety of fees and charges including a monthly fee and a credit card deposit fee.

If you manage your withdrawals and account checks to in-network services, you’ll probably be fine; but if you travel a lot internationally or have to use a fee ATM service, it may not be particularly affordable. However, many pre-paid cards seem to offer similar packages.

The good news is: no need to pay interest rates on your prepaid card, so stuffing one in your wallet may be quite useful at times. Just remember to keep cash in it and monthly rates are $1.95. Oh, and don’t get a paper statement! That’ll set you back $2.95.

How Do Bloggers Use Their Credit Cards? Read on…

Ages ago, I posted a reply to a request from Mr. Credit Card’s survey. I’d forgotten all about the survey until I received this email announcing his results: It’s worth reading, and great link bait. As is his follow up post on the bloggers involved!

Mr Credit Card here.

During March and April, I sent out an email to do a credit card survey. In fact, I sent out to over 150 pf bloggers. 45 of you have responded to the survey and I want to thank all of you for that.

But first, I want to apologize for taking so long to publish the results. There were several reasons. Firstly, I sent a few reminders to the people I sent the survey to and this took a while. Then, when I upgraded to WordPress 2.5.1, I could not load any images (and I had to for this survey). My full-time work also got in the way.

Having said all that, I have published the results. I want to thank you all once again. In return for participating in this survey, I will mention your blogs in a special post tomorrow (hint : it’s not just a post full of links).

So watch out for my emails again tomorrow. And I hope you learnt something from this survey.

Regards – Mr Credit Card

And…

As a way of saying thank you to all of you, I have actually written a follow post that briefly describes you and your site and I’ve picked what I thought to be the best or most interesting credit card post you have written on your blog. I’ve named the post “Ultimate Collection of Credit Card Posts” – (well, maybe I’m exaggerating, but hey – it’s all of your post!).

Thanks once again. And I would appreciate if you could spread the word about the survey and the collection of cc posts. I’ve certainly learnt a lot from this and I might just write up my thoughts on how we could collectively make better use of our cc in a post tomorrow.

So watch your emails again!

Regards, etc..

If you’re interested, check out one of my favorite Credit Card Posts on this blog (I do have tons in the archives on Credit Cards!).

Happy Blogging, and keep that credit card tucked away!