There are times when we all need to borrow money. Here are three ways to consider when borrowing on a short-term basis.
Credit card cash advance
It can be risky and expensive to take a cash advance on your card since the interest rate on this type of transaction is typically higher. But if you plan to pay the advance back as soon as possible, this is a viable option.
“When you use a credit card, you are borrowing money in the sense that the credit card company pays the merchant on your behalf—in effect, advancing you the funds—and then you reimburse the card issuer when your card statement arrives. On the other hand, a credit card can be used to pay for anything other than goods and services. It’s referred to as a cash advance,” notes Danny Marshall of Mortgage Rate Guru.
Don’t use a credit card with a high-interest rate. “I make use of a zero percent APR credit card. Though a zero percent APR credit card works better under an excellent credit that I had, it allowed me to pay back the money I borrowed without interest,” shares Nathan Hughes, marketing director of Diggity Marketing.
Ask family and friends
“Sometimes your friends and family can be your lenders of last resort. You can borrow some soft loans from them with zero interest rates. Moreover, most families keep an emergency kitty that you can borrow and refund as agreed under the terms you’ve set. This cuts off the formal application for loans, which can be tedious and lengthy,” suggests entrepreneur Scott Steward, founder of Hi Collectors.
Instant digital loans are made by using a website or an app. “Loan apps are more accessible types of loans since they are fairly convenient. You don’t need any forms to fill, and they are not attached to any collateral. It also saves you the inconvenience of explaining to friends why you need to borrow money from them. You can acquire them under certain terms that attract a small interest that is manageable for payment,” explains Steward.
The use of digital loans is growing. They are easy to apply for, since all you need to do so is the Internet and app. Interest rates typically range from two percent to six percent per month. Multiple fintech companies offer digital loans. Approvals can happen in minutes. Bear in mind that digital lending is relatively new, so be sure to do your due diligence before signing up with a digital lender.
As with all loans – whether via a conventional bank, credit card, family /friends, or digital –borrowers are obligated to repay them and should do so on time to avoid possibly hefty penalties.