Life with debt
Most people consider borrowing from financial institutions normal, even desirable. We are inundated with advertisements from banks offering "almost free" loans and credit cards that will solve all your life's problems. Such advertisements fall on fertile ground since we all sometimes tend to step out of our financial constraints, even for a short period. This "short period" usually becomes - for life.
Since it is already difficult to avoid loans, it would be wise to choose the type most favorable for us.
Credit cards
Many think that the simplest way of borrowing is also the best. These would be credit cards - when you need money, you simply pull the card out of your wallet and swipe it through the POS or insert it into an ATM machine.
Credit cards are a type of revolving credits. They are very simple and easy to use, but that simplicity comes at a high price. Interest charged on debt that is not repaid by the due date each month – is usually higher than interest on any other type of loan.
Credit cards are simple and easy to use, but that simplicity comes at a high price.
Banks avoid showing the total costs and expenses of this type of borrowing, but instead they clearly show the user, for example, solely the monthly EIR (Effective Interest Rate) amount of, say, 2.2%, which shall mean that the annual interest according to the conforming method of calculation would be as much as 29.84%.
Overdraft
Almost all employees have an overdraft at least in the amount of their monthly salary activated with their bank where they receive their salary. Interest on this banking product ranges up to 30% on annual level. Permissible overdraft is intended for occasional bridging of liquidity problems, and never for constant use in the full amount (as most do).
Cash loans
There is a large offer of cash loans on the market at quite acceptable effective interest rates ranging between 10% and 18% on an annual basis. A cash loan can often be obtained regardless of whether you receive your salary or pension through a current bank account or not, often without a down payment, usually only with a certified certificate of employment and amount of income.
Conclusion
Although it doesn't seem like it at first glance, it is often the most profitable for users of credit card loans and overdrafts to "cover" the amount they use for such banking products with an appropriate cash loan.
Costs and expenses for cash loans are sometimes even twice lower than for credit cards and permissible overdraft.
In this way, if already forced to use loans, they can significantly save on costs and expenses, which are sometimes twice as low for cash loans than for credit cards and overdraft.