Payday Loan vs Credit card

In Singapore when you are researching and making a comparison between payday loans and credit card cash advances, you will get confused by their different offerings.

Many credit card companies are increasing the competition as they compete against different lenders and amongst themselves to give fast cash loans to individuals.

In Singapore, it is easy to get a loan with the various schemes for the various package loan facilities. Licensed moneylenders, banking institutions and variation of loan companies offer varying loan types to suit their different consumers. To get a clearer picture below are differences between the credit card cash advances and payday loans.

Payday Loan

Payday Loans

When you generally look for a personal loan, you may have come across many different words used interchangeably. These words may include; personal loans, payday loan, fast loan and cash advance. 

Payday Loan Definition

This is a short-term loan that enables individuals to borrow a loan amount depending on their monthly income. There is a minimum cap on each month’s income depending on the rules guiding moneylenders. This cap also applies to individual borrowers who have a higher monthly salary which allows them to borrow more cash.

Also referred to as personal loans and payday advances – is a version of an unsecured loan. This means no collateral is required to take out this loan type. Payday loans are normally approved depending on your income. They also come tailored to an individual borrower’s ability to repay in a given timeframe. Every now and then payday loans are paid back in several split payments. Even then, the entire loan amount is to be repaid with the fixed interest.

Although licensed moneylenders offer this loan type, the interest charged varies accordingly. A notable advantage of taking a payday loan is the adjustable or negotiable repayment plan. This greatly helps a borrower with regards to money management. This makes this loan type a better plan for individual’s finances.

An additional advantage that licensed moneylenders present their customers is simple policies on rates charged. Interest rates charged on loan amount taken with no hidden charges.

Credit Card

Credit Card Cash Advances


The credit card cash advance is issued to an individual depending on their accessible credit limit instead of your monthly salary. The credit card advance is normally treated as though it were a purchase made using the credit card. The credit cash advance repayment terms and conditions are often times strict.

Cash advance on your credit card might or might not give you a deal which is better than a payday loan. This is however dependent on your credit ratings and if you are creditworthy. A number of credit companies may charge interests that are higher on cash advances than the payday loan given by moneylenders.

Cash loan advance comes with the monthly credit card bills and it needs to be reimbursed accordingly. The interest rate is compounded each day and a substantial application fee is required when you make a loan request.

This credit card cash advance has hidden charges on the principal amount which might be late payment fees, withdrawal fees, transaction fees, card fees, banks service fees and setup fees. These charges are often not known to the borrower.

In addition, a lot of the credit card companies need you to make repayment on all the existing non-cash balance onto the credit card cash advance.- these are normal purchases you will have made using your credit card. This for a borrower means that you have to pay up this amount first with a lower interest. This is the cash advance amount outstanding is untouched and it will keep increasing and the interest compounded.

If you have ever received credit card cheques in your mailbox from credit card companies, then you need to know that these cheques are always treated as cash advances. Although these cheques offer you big sums of money, the misconception that many people have is that they come with the accompanying negatives. Most people tend to think this is an easy form of credit without them realizing that this loan type comes with multiple charges.

Credit companies in Singapore put a ceiling on the maximum loan amount depending on your credit limit. Cash advances often attract heavy interest rates and finance charges starting from the first day the loan is taken till when it is fully repaid.

The cash advance has its advantages where the borrower is able to request for loan transfer into their account. The borrower is also able to easily make withdrawals at the credit company’s ATM. Some credit card companies offer loan applications through the phone either by SMS or cash-on-call.

As a rule, you can avoid the huge charges when you make payments on the credit card statements each month. Do ask the card issuer to clarify for you how the interests are worked out. Ask them to also provide you with a working of an exemplary loan amount.

Evaluation And Results: Make A Wise Choice


The best way a borrower can go-about these loans. Payday loans may at times have high-interest rates compared to cash advances. This is because moneylenders take a high risk of borrowers defaulting.

Nevertheless, when you have been a regular customer and have a great history of timely payment, licensed moneylenders will often give you a better repayment policy or better rate. You can also discuss with loan officers for a convenient repayment plan suitable for you.

Payday loans have great flexibility in regards to repayment plans. When the repayment time period is taken into consideration, you are better off taking a payday loan. Payday loans, on the other hand, have no hidden charges. This allows lower-income individuals who cannot access credit card to access a loan.

Based on the loan requirements for your loan type, make the right and suitable choice. Regardless of the loan type, you are looking for, do a thorough research, read through reviews and also check out what the competition may be offering.