Short-term credit options: banks versus outside lenders

'Tis the season to be short on money... or not? Between holiday parties, gifts, and regular bills, many people might find themselves in debt. Instead of racking up the credit card and overdrawing your bank account until you get overdraft fees, consider the alternative: short-term credit. Short term credit can come in a couple different ways: outside lender payday loans or bank-offered checking account advances. Which option is better for your already tight budget?

The most commonly recognized outside lenders for payday loans are Check Masters and MoneyTree. Both companies offer the same rate on their pay day loans: from 50 dollars to five hundred have an APR rate of 391.07%, five hundred and up have specialized (higher) rates. The loans are given in 50 dollar increments.

These payday loans are quick to get if you have the right paperwork with you. They require the customer to have a checking account, be employed, bring in their last pay stub, have a valid id, working phone number, and in some cases a bank account statement. Check Masters and MoneyTree are open longer than a bank is; MoneyTree offers on-line payday loans.

Bank offered checking account advances, like the ones at US Bank or Wells Fargo, are similar to the payday loans. Instead of a high interest rate, the bank charges 120% APR. So, for every 10 dollars you borrow, you pay a dollar. Instead of lending in 50 dollar increments, banks offer 20 dollar increments.

You are able to draw on your regular deposits and then paid back at the time of your next deposit. Anyone can get these checking account advances, as long as the account is approved for it. The determining factors for approval are: frequent deposits (like direct deposits) and a history with the bank. The bank may have shorter hours than a payday loan place; however, they do offer free internet banking.

You decide. Would you rather pay 391.07% on your hard-earned dollar? Or do you want to consider changing banks to save yourself a few dollars? Every little bit helps.