Payday Loans vs Credit Cards
The total cost gap is enormous. Here's the math.
Side-by-side cost
| Payday Loan | Credit Card (Purchase) | Credit Card (Cash Advance) | |
|---|---|---|---|
| APR | ~400% | 18% – 29% | 25% – 30% |
| Fees | $15 per $100 | None | 3% – 5% |
| Repayment | 2 weeks, lump sum | Min payment, revolving | Same as purchases |
| Cost of $500 for 2 weeks | ~$75 | ~$5 | ~$20 + 3% fee |
When a payday loan wins
Only when you have no card available or your card is maxed out. Even a cash advance is dramatically cheaper for a 1–4 week need.