People often confuse credit union loans with credit card cash advances.  However they are different.  Both are easy funding sources and both have their pros and cons. A detailed study of these aspects may help the right decision for the borrower.

There are hardly a person who does not face some financial difficulties or other that could crop up all of a sudden.  Especially those who have bad credit ratings, such financial crisis could turn out to be very challenging and acute.  Against such backgrounds two ways to get out appear most reasonable.  The first of them is the credit union loans and the second of them is the credit card cash advances. However a pertinent question is that in case of trade off, which one is more favorable, credit union loan or the credit card cash advance.

Understanding the Credit Union Loans

Credit union loans are normally extended by the credit union that is one of the financial co-operatives that is owned as well as managed and controlled by the members.  It can serve multiple purposes.  However, the main purpose of such credit union is to promote thrift and provide credit to all its members.  The basic advantage is that the rate of interests is always reasonable. So far as the policies and decision making for the credit union is concerned, it is normally the domain of the Board of Directors.   Members of the Board of Directors are ordinarily elected by the members of the union.

Credit Union loan advantages and disadvantages

Practice followed by most of the credit unions is to advance modest loans to the people basing on affordability.  The best part of it is that it does not check for the poor credit ratings of the borrower. Usually the loan would range a few hundred pounds only that helps keeping the EMI or the monthly repayments lower.  Credit Union does not enter into financial business for profit and they will offer good rates of interests. Their interest rates are often favorable in comparison to the credit card cash advance loans. There are also legal constraints on the Credit Unions as they cannot charge more than 26.8% APR.  Best news for the borrower is that there is no penalty on early repayments, the hallmark of other personal loans. On the downside is the amount of the loan that is sanctioned by the credit unions. They are smaller and are dependent on the amount of savings made by the members of union together.

Considering the advantages and disadvantages of credit card cash advance loans

Usual practices with credit cards are that they allow a specified credit limit for the holder.  The holder uses the card for buying things within the prescribed limits.  As long as the spending is within the prescribed limits, the provider of the card takes the responsibility of their payment. Borrowing is simple and convenient.  At times advance limits of thousands of pounds are allowed on the credit card without taking stock of the repayment powers of the borrowers. However such advances come without any fixed term making you repay the credit for long years together.  The APR also happens to be quite high for such credit card cash advance loans. It may not be possible to stop your buying spree in time and you end up paying much more than what you should have.

Bottom line of all these is that credit union loan is much better in comparison to the credit card cash advance loans in terms of financial charges as well as the interests paid. However, the credit card cash advance could be a better option only when there is some acute financial emergency.