Pay with a payday loan or credit card?

Would it be better to ask for a payday loan or not wait and go out and buy what you need with your credit card? That dilemma has a solution.

The differences between a payday loan and a credit card are important. Yes, it is true, both are financing lines. Both are offered by banks, banking companies and municipal savings banks. Both help you in times of crisis. And both allow you to grow.

The financial decision is to pay for the study or the holidays with your credit card or the resources you get for a payday loan.

What will be more convenient?

Payday loan or credit card

Personal loan or credit card

Let’s review the characteristics of a payday loan:

  • The term can be extended up to 60 months
  • They can lend (depending on the financial entity) up to S / 210,000
  • Rates (ASD) fluctuate between 11% and 31.44% according to the amount and term (date of 12/17/2018 of the SBS).
  • Approval can take minutes or days, depending on the entity.

Credit cards have these conditions:

  • The term can be up to 36 months (very few offer more time).
  • The quota varies according to the income of the person.
  • Annual rates range from 21.85% to 151% (date of 12/17/2018 of the SBS)
  • If you already have the card you don’t need approval and you could use it up to 100% of the line of credit *.

As you can see, the term and rate are different in payday loans and credit cards.

And that couple of factors is what should guide you to make the decision.

Which to choose

Which to choose

The decision will be based on the answers to these questions:

  • What do you need the extra money for?
  • How much do you need?
  • When can you afford it?

The normal thing is to use the cards in commerce, retail, restaurants and bars. People generally “like each other”, spend, consume with cards.

On the other hand, payday loans are widely used for study payments, home remodeling, starting a business or vacation. They are, as a rule, investments.

For example, if you want the money to buy a television, credit card is probably a good alternative. You will pay a higher interest rate, but you could pay it in a few months.

But if you need several televisions and computers to start a business, perhaps it is best to ask for a loan. You will pay less interest.

The amount is the second factor to evaluate.


  • If the amount is small, it may not be justified to start a credit approval process (whether online).
  • When the amount is considerable, five, six, seven times the income, a credit will be the most convenient.

Finally, the term.

Finally, the term.

  • If you can pay in a few months, three, for example, and the amount is low, the card will be a good option.
  • If you require at least five years to repay the investment, a payday loan is the best alternative.

In general, our recommendation is to use the shortest possible time to pay the credits.

Less term, less interest, better business.

Other options

Other options

Holidays are a good example of how to use both financing lines:

A personal credit will be cheaper.

But buying airline tickets with cards has great benefits such as medical insurance, car rental discounts or accumulating points and miles.

How about, requesting the loan, with a twelve month term (because it is the time you estimate you will need), buying the tickets with the card and using the credit resources to pay the credit card for a fee