Why 0% credit cards are a better option than payday loans

Close up of a green credit card

Payday loans are everywhere nowadays, and lenders try hard to convince customers that they’re the best option – but that isn’t the case. For most borrowers, 0% credit cards make much more sense, with many advantages over payday loans. Here are just a few:

Flexible borrowing

Among the biggest advantages of a 0% credit card is that you don’t have to over-commit yourself. If you need a little more later, then you can borrow a bit more on the card, secure in the knowledge that you won’t be paying more for the privilege. With a payday loan, you’ll need to decide up front exactly how much you want to borrow, creating a tendency to err on the high side “just to be safe” – which will always end up more expensive, since the total interest repayable will increase.

No massive interest charges

One thing everyone knows about Payday loans is that their interest rates can be eye-wateringly high. Even if you’re only borrowing £200 for a month, you could find yourself having to pay back £280 or more at the end of the loan period. With a 0% credit card, this simply isn’t a problem, so put the calculator away and relax in the knowledge that everything is far more straightforward: when you borrow £200, that’s the amount you’ll need to pay back.

Pay back when it suits you

With a payday loan, you’re unlikely to have flexibility as to when to complete your repayment of the initial capital. If unexpected expenses arise, this can prove to be a real struggle. The fixed fees many payday lenders charge don’t help, either. Rely on a 0% credit card and you can arrange your repayments to suit your circumstances. Providing you meet the minimum monthly repayment, you can split paying back the loan over more than one month.

Suitable for longer-term borrowing

A payday loan makes a very poor option if you need to borrow money for more than a few weeks, even with lenders who allow debt to be rolled over to a new month. Even conventional credit cards are cheaper, but loans taken out using 0% cards are still more desirable. Shop around to find the best card for you, as they’ll vary in terms of how long their 0% rates last, but both balance transfer cards and those which add no interest on purchases are out there.

Peace of mind when you buy

One of the best pieces of consumer finance legislation is the Consumer Credit Act’s Section 75. This guarantees that your money is safe if you pay for larger purchases with a credit card. It only applies if your bill is over £100, but it means that even if the retailer goes under, your card company will be liable and will refund your money. 0% cards mean even less risk. If you borrow from a payday lender, none of this protection applies, so you could lose everything.


Different Types of short term loans

Short-term loans are loans offered with short reimbursement cycles. You can easily get them because the sum of money involved are very small. You can apply for more than one short term loan at a sitting depending on the reason you want it. There are numerous types of short term loans. It includes;


1. Installment loans

This type of loan is best explained in a situation whereby a client of a bank is loaned an amount of money on a short term loan basis. Now, the client will have to make repayments periodically until he has paid the loan amount which includes interest in full.

Installment loans are utilized when people want to pay for a cars, homes or a part of their college fees.


2. Title loans

These are well thought-out as one of the fastest developing credit products. They’re of deep over-secured, high-interest client loans in which the client utilizes his car as a security for a non-purchase money loan. These loans are completed with concentration on the car’s equity.

This kind of loans are utilized by individuals looking for a quick and easy way to make money by using their vehicle’s title as an alternative to their credit score.


3. Loan consolidation

Loan consolidation allows customers to combine multiple short term loans into a single loan at no cost.

When to use loan consolidation

Loan consolidation is used by customers who do not want to make several payments to different lenders rather to one particular loan provider who will then clear their debts.


4. Payday loans

Payday loans are considered as short-term loans that are paid directly into one’s bank account and are meant to help people deal with pressing financial issues as they await their payday. The loan should be repaid with the stipulated interest as soon as the paycheck is processed although some lenders may give you the freedom to choose your payment period.

When to use payday loans

Payday loans are used by people who have financial crises that need immediate attention.

5. Bank overdraft

Bank overdraft can be defined as an extension of credit whereby the fees charged on customers’ transactions are covered by financial institutions because the customers’ checking account lacks sufficient funds.

When to use bank overdraft

Bank overdrafts are used when a customer wants an intentional loan, when there is an ATM overdraft and when he or she fails to maintain an accurate account register.


6. Secured loan from the bank

Secured loans from the bank are those secured against the value of a customer’s property and are secure in respect to the lender. This loan is secured on customers’ homes and if they fail to repay it, they can be forced to sell their homes to clear the debt.

When to use secured loan from the bank

Secured loan from the bank are used by customers who have homes of high value which can enable them to get loans for achieving a certain goal.



Short term loans are essential because they enable people to gauge their ability to pay loans. If one is able to pay a short term loan without constraints, it will be easier for him or her to manage and repay a bigger loan.