iQuanti: When you’re in desperate need of money, you may be willing to look anywhere to get it. But certain fast cash options may land you in a tough spot financially just for borrowing money to cover essential expenses or an unexpected bill. So next time you’re in a bind and need money now, here are 3 fast cash options to avoid and where to turn instead.
Pawn shop loan
If you need cash and have items of value like jewelry, artwork, or electronics, pawn shop loans may look appealing. And, if you have an item worth pawning, you can often get cash in minutes with no credit check.
But the major downside of a pawn shop loan is that you’re risking losing your item forever if you can’t repay the loan on time. Add to that interest rates, which can be very high, and you may find it difficult to repay what you owe. Plus, depending on how much money you need, you may have to pawn a more valuable item since pawn shop loans offer only a fraction of the item’s worth.
Credit card cash advance
The allure of a credit card cash advance is that you can get money fast at the ATM with no approval, just as you would using a debit card. But this type of short-term loan has several downsides.
The interest rate for a credit card cash advance could be up to double what you would pay for regular credit card transactions. Plus, when you tack on the credit card cash advance fee, it may cost a lot more to pay back.
Credit card convenience check
A credit card convenience check is similar to a regular bank check, but instead of debiting money from your checking account, it adds money to your credit card balance. The problem with convenience checks is that the fees and interest rates can start accruing rapidly.
Plus, handling paper checks always carries the added risk of physical loss. And unfortunately, the bank may not be willing to reimburse you like they might be able to if you make the purchase using your credit card.
Fast cash alternatives to consider
These loan options may be a better choice than pawn shop loans, credit card cash advances, and convenience checks:
Installment loan: An installment loan can give you a lump sum of money upfront that you can pay back over time in fixed monthly payments, or installments. If you want a larger loan amount and don’t want to use an item you own as collateral, then this option may make sense.
Cash advance: If you have a steady paycheck, you may be able to get fast funds with a cash advance. And since these loans often come with lenient credit score requirements, borrowers working to improve their credit score may still get approved.
Personal line of credit: A personal line of credit is similar to a credit card in that once approved, you can access an open-ended revolving loan and spend up to the limit. You’ll then need to make minimum monthly payments until the loan is repaid. A major benefit of a personal line of credit is that you’ll have consistent access to money, often at a lower interest rate than a credit card.
The bottom line
You may run into a situation where you need to get a loan to cover expenses quickly. But some types of loans like pawn shop loans, credit card cash advances, and credit card convenience checks may be more trouble than they’re worth. Instead, looking at options like an installment loan, cash advance, or personal line of credit may help you get the money you need at more favorable loan terms.