Should You Borrow Money Now?

Right now, more than 30 million Americans are on unemployment, or in some states, trying to get unemployment started.  Cash is becoming scarce as the first round of stimulus checks has long since been spent.  But, if you're running out of cash, should you borrow money to survive?  And if so, where should you go to borrow the cash?

If you don't want to go to family members to borrow the money that you need, there are three other options to consider if you need money quickly:

  1. Find an affordable credit card:  When used wisely, a new or existing credit card account with an interest free (or even a low interest) deal is the fastest and easiest way to get the cash you need.  And, chances are, you may have up to two years to pay the balance off!  Just be sure to read the fine print on any cash advance option to make certain that the low or interest free deal includes cash advances, and make a plan to repay the money before the promotional time expires.  
  2. Personal Loans:  An unsecured personal loan typically comes with a lower interest rate than a cash advance on a credit card that has no promotional offer attached, however, you typically have a fixed payment for a longer period of time, so a personal loan might be easier to repay.  Just be careful that you don't overstress your normal budget when you take out the loan or you might just find yourself short of cash after the crisis is over!
  3. Payday Loans:  If you're still working and need an immediate cash infusion, but have no other options, there are payday loans available online that you can take advantage of.  Just be careful not to get into what we call the payday loan cycle, meaning that you're continually borrowing next week's paycheck this week – the interest rates tend to be very high and, once you get into that cycle, it's very difficult to get out. 

Of course, there is one final option.  You can contact each and every one of your creditors personally and request special payment terms to get past the cash crisis.  Right now, nearly every utility, mortgage, loan, and credit card company is working with customers in response to the COVID-19 pandemic.  Just be sure that you know, in advance, when your arranged payments are due and what effect, if any, the delay will have on your credit score – one or more reported late payments can take years to drop off your credit report.  

Category: Uncategorized