Once again, this isn’t an extortionately high-interest rate on paper. Especially not compared with payday loan companies. However, it’s almost certainly worse than what your bank could offer you for the same amount over a long period of time.
Bank Loan vs. Cash App Borrow
The key difference between borrowing from Cash App and taking a loan with your bank is the financial viability of the money you borrow. A bank will assess your income and determine how much they can offer you based on your earnings and outgoings.
They’ll also structure a payment plan around those aspects of your life so that you don’t end up out of pocket because of the loan.
Cash App is different because they won’t be looking at your earnings and outgoings. While the company almost certainly checks your credit score, that’s probably all it does.
As long as your score is high enough to qualify, they’ll let you borrow money. This is dangerous if you can’t afford to pay the loan back and could land you in some serious debt over time.
However, Cash App does have certain requirements on regular deposits before you can borrow money from them. It could be argued that if you can afford to deposit $1,000, then you can afford to pay off a $200 loan. That’s what makes the service so accessible. It’s far easier than applying for a loan with a bank too.
You can’t borrow money from a legitimate and responsible source such as a bank or Cash App without them running a credit check and looking at your credit score. If you borrow money from Cash App, they will check your credit score to see if you’re eligible for a loan of the amount you have requested.
However, unlike a bank, Cash App doesn’t take your current circumstances into account. Instead, the system will check https://paydayloanstennessee.com/cities/parsons/ your credit score is of a certain level.
As long as your credit score meets their requirements, the system will allow you to borrow the requested amount. While there is an additional barrier of having to deposit a particular amount before getting to the borrowing process, that doesn’t have anything to do with your credit score.
Some credit score checks will count against you and lower your score. Unfortunately, that’s part of how the system works. On the other hand, borrowing money and paying it off in a timely manner counts towards a better credit score.
So it’s in your interest to make use of features like short-term loans and credit cards because you raise your credit score with them.
This doesn’t mean that you should borrow from Cash App for the sake of it. Instead, you should only borrow money when you need to.
Why You Should Borrow From Cash App
Borrowing money from Cash App is no different from taking a small short-term loan. Just like a short-term loan, there are only certain circumstances in which you should choose to borrow money.
For example, if you need $100 to pay for food until your monthly paycheck is deposited in your account, borrowing from Cash App might be the best option for you. It’ll give you the chance to eat without having to dip into a credit card. You can also easily pay off the amount you’ve borrowed as soon as you get paid, thanks to speedy deposits.
If you need $200 extra to pay your rent for a month between jobs, that’s another excellent example of when you may need to borrow from Cash App. Again, when you’ve been paid for your new job, you can pay off the loan.