Offers for credit cards are in full swing during the holiday season. They’re coming from every direction faster than you can sing We Wish You A Merry Christmas. Flooding your mailbox, inbox and every retail check out teasing you with 18 months interest free or sign on bonus offers.
The compelling nature of swiping now and worrying about high interest later is deceiving. We are here to say there’s alternative ways to borrow without paying heaps of interest long term.
Click here to check out some of the best credit cards.
Why Are Credit Card Interest Rates So High?
Although credit cards are great for establishing and improving your credit score, you might be in a situation where you have no credit, poor credit or you’re already in debt because of high interest credit cards or loans. Education and understanding how credit cards work is vital in order to practice responsible financial habits before you start borrowing money.
Lets face it, credit card companies are in business and you’re their customer. They make their money off the interest they charge from lending you money. If you miss or forget a payment, expect fees and penalty interest rates to be added to your existing payment.
Sign up bonuses are great, if you plan to pay the card in full before the offer expires. If not, the regular APR will apply to any unpaid and future amounts used on the card. Credit card interest rates are commonly above 20% or more, especially if you have zero to poor credit.
One MoneyLion member had a credit card with 27.99% APR before utilizing our competitive interest rate Credit Builder loans. Click here to learn about common credit card questions.
Does Credit Card Interest Accrue Daily?
Yes, although APR means annual percentage rate, you’ll need to convert your APR to a daily rate. To do this you would need to divide the APR by 365 (some banks do 360 but the difference is barely noticeable). That rate is called the daily periodic interest rate.
After figuring out your daily rate you need to review your billing period, day by day, and figure out each days balance. Then, add up all the daily balances and divide by the number of days in the billing cycle. That number is your average daily balance.
Finally, multiply your average daily balance by your daily rate. Whatever that number is, multiplied that number by the number of days in the billing period. This is the formula to figure out how your interest is calculated. Whew!
Credit Card Alternatives
Credit card interest can be difficult to understand (as seen above), especially if your lender issues compounding interest daily or monthly. Unless you plan to pay off your credit card in full every month, revolving interest is to be expected.
Another common form of borrowing during the Christmas season is a payday loan. Our advice? Run and never look back. These predatory loans, in some states, have low consumer protection and outrageous interest rates.
Need cash now and want to avoid the high interest options? Consider an alternative from MoneyLion with Instacash, Credit Builder Loan and Early Paycheck from RoarMoney.
Instacash
A perk for being a RoarMoney account holder, you can borrow up to $250 with 0% interest, no fees and no credit check. Download the mobile app, link your checking account and borrow instantly!
Early Paycheck
Sometimes waiting to get paid can result in late bill payments. Wave bye-bye to those late fees when you have linked up direct deposits to your RoarMoney account. You can receive your paycheck up to 2 days early. Find out more details here.
Credit Builder Loan
Need a little bit more than our Instacash tool offers? A Credit Builder Loan from MoneyLion is perfect when you need to borrow up to $1000.
In order to qualify for a Credit Builder loan you must link a primary checking account allowing MoneyLion to securely review your financial history to determine your eligibility and competitive interest rate.
This type of loan is a beneficial alternative to someone looking to improve their credit score (your payments are reported to all 3 credit bureaus every month) and borrow with affordable payments.
Check out the table below to compare MoneyLion products to other borrowing options.
Instacash | Early Paycheck with RoarMoney | Credit Builder Loan | Payday Loan | Credit Card | |
|---|---|---|---|---|---|
Interest Rate | 0% APR | 0% APR | Competitive APRs | Up to 460% | Up to 29.99%* |
Fees | Free | $1/month | $19.99/month fee | Yes | Yes |
Credit Check? | No | No | No | Varies | Yes |
Wait Time | Instantly* | Instantly | Instantly | Same Day | Available once you receive card |
*Instacash Turbo (instant) delivery of funds is $3.99-$4.99. Credit card APR may vary.
Avoid Credit Card Debt and Bank With MoneyLion
Considering 35% of your overall credit score is based on on-time payments and history, being about to afford your payments is a must. When your interest rates from credit cards or payday loans are sky-high, that might feel impossible.
Borrowing for holiday shopping can be done without ending up in a mountain of debt when you bank with MoneyLion. Download our app to help you avoid perpetual credit card debt and get cash today!
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Disclosures
Credit score improvement is not guaranteed. A soft credit pull will be conducted which has no impact to your credit score. Credit scores are independently determined by credit bureaus, and on-time payment history is only one of many factors that such bureaus consider. Your credit score may be negatively impacted by other financial decisions you make, or by activities or services you engage in with other financial services organizations. MoneyLion is not a Credit Services Organization.
Credit Builder Plus membership ($19.99/mo) unlocks eligibility for Credit Builder Plus loans and other exclusive services. This optional offer is not a Pathward product or service. A soft credit pull will be conducted which has no impact to your credit score. Credit Builder Plus loans have an annual percentage rate (APR) ranging from 5.99% APR to 29.99% APR, are made by either exempt or state-licensed subsidiaries of MoneyLion Inc., and require a loan payment in addition to the membership payment. The Credit Builder Plus loan may, at lender’s discretion, require a portion of the loan proceeds to be deposited into a reserve account maintained by ML Wealth LLC and held by Drivewealth LLC, member SIPC and FINRA. The funds in this account will be placed into money market and/or cash sweep vehicles, and may generate interest at prevailing market rates. You will not be able to access the portion of your loan proceeds held in the credit reserve account until you have paid off your loan. If you default on your loan, your credit reserve account may be liquidated by the lender to partially or fully satisfy your outstanding indebtedness. May not be available in all states. Credit Reserve Accounts Are Not FDIC Insured • No Bank Guarantee • Investments May Lose Value. For important information and disclaimers relating to the MoneyLion Credit Reserve Account, see Investment Account FAQs and FORM ADV.
With direct deposit. Faster and easier access to funds is based on comparison of traditional banking policies and deposit of paper checks versus deposits made electronically and the additional methods available to access funds via a card as opposed to a paper check.
Instacash® is an optional service offered by MoneyLion. Your available Instacash Advance limit will be displayed to you in the MoneyLion mobile app and may change from time to time. Your limit will be based on your direct deposits, account transaction history, and other factors, as determined by MoneyLion. Expedited delivery requires Turbo Fee. See Instacash Terms and Conditions for more information and eligibility requirements.
MoneyLion does not provide, nor does it guarantee, any third-party product, service, information, or recommendation. The third parties providing these products or services are solely responsible for them, as well as all other content on their websites. MoneyLion is not liable for any third party's failure with regard to those advertised products, services, and benefits. These advertised products and services may not be FDIC insured or bank-guaranteed, and may be subject to a different privacy policy than MoneyLion’s. You should check individual offers, products, and services to become familiar with any applicable restrictions or conditions that may apply. MoneyLion may receive compensation from third parties for referring you to the third party, their products or to their website.
MoneyLion is a financial technology company, not a bank. RoarMoney℠ demand deposit account provided by, and MoneyLion Debit Mastercard® issued by, Pathward®, National Association, Member FDIC. RoarMoney is a service mark of MoneyLion. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International. Funds are FDIC insured, subject to applicable limitations and restrictions, when we receive the funds deposited to your account.
Instacash is a 0% APR cash advance service provided by MoneyLion. Your available Instacash advance limit will be displayed to you in the MoneyLion mobile app and may change from time to time. Your limit will be based on your direct deposits, account transaction history, and other factors as determined by MoneyLion. This service has no mandatory fees. You may leave an optional tip and pay an optional Turbo Fee for expedited funds delivery. For a $40 Instacash advance with a Turbo Fee of $4.99, your repayment amount will be $44.99. Generally, your scheduled repayment date will be your next direct deposit date. An Instacash advance is a non-recourse product; you will not be eligible to request a new advance until your outstanding balance is paid. See Membership Agreement and help.moneylion.com for additional terms, conditions and eligibility requirements.