Credit card VS personal loans: Which one is better?
Life is full of uncertainties and so are its expenditure. You don’t know when can the next emergency take place and put you into a big cash crunch.
One of the most popular solutions to balance this is opting for a loan. This will offer you fiscal prudence as well as help you meet the financial obligation.
So, are you planning for a big-ticket purchase?
But confused between Credit Card or Personal Loans?
Generally, in the real sense, both can give you a quick influx of money, but the selection of a type of loan is based on the nature of requirements. Let’s discuss in detail for a better insight-
Why Choose Credit Cards?
Credit Cards are the pre-approval loans that come into the category of revolving credit. This is because there exists a correlation between the borrowed amount and the fund spend on the credit card. However, for in-store physical payment, this kind of loan tops the list with ‘One swipe pay’.
But, this is not the same as a cash withdrawal. It comes with a specific credit limit where only selected candidates are eligible for credit cards.
And, once you apply for, it’s free interest-free credit period lasts for 45 days, having a pre-approval borrowing limit.
The incredible benefits of using credit cards are-
· Average or Good credit? You are eligible
· Interest is charged only when funds are used
· Convenient and bring good rewarding points
· Applicable for small business purchase
Why choose Personal Loans?
Personal Loans are an unsecured loan. They are not backed by any collateral security. It remains fixed for the entire repayment period. So, you don’t have to worry about the contingencies.
It can be put to use for medical expenses, auto loans, foreign tours including debt consolidation, utilizing for emergent family requirements or repayment of a prior-taken loan.
All you need is to maintain an excellent credit score to celebrate the pool of benefits of personal loans. Because the lender uses your credit report to evaluate whether it will be feasible to grant a loan or not. They often decide the interest rate based on that.
Frankly speaking, the better the credit score, the lower will be the interest rate.
But, compared to credit card loan, Personal loan has a higher rate of interest. You can negotiate the interest with the bank, while this is not the case with credit cards.
The incredible benefits of using personal loans are-
· Eligibility criteria are less stringent
· No collateral involved
· Ideal for a big-ticket purchase
· You receive a lump-sum amount with a long tenure of repayment
What is ideal for you– Personal Loan or Credit Card?
Ø If you want to spend today and clear dues later — Credit Card hit the rank. If you want to clear dues in a fixed monthly installment without future burden- Go for Personal Loan.
Ø Deciding for procuring long amount with a widening tenure, Personal Loan is an ideal. But, looking for a small ticket purchase, you must opt for a credit card loan.
Ø Are you looking for financial discipline? Choose a credit card. It is available 24*7. While a personal loan is not readily available, it requires some additional time depending on the financial potential of the applicant.
Ø If you have a regular temptation for borrowing more money, use credit cards. Personal loans won’t allow. But, you know, there’s a bonus, when you use Personal loans to clear off your credit card debt. This will create a good reflection by lowering down your credit utilization ratio.
The Final Words:
The demand for Credit Cards and personal loan will surge because investors and businessmen would have to conduct their payment obligations. And, thus, the selection of a type of loan will be based on your requirements and decision-making level.
However, we can say that the banking sector has to keep on evolving with the latest schemes and offerings to add a valuable impact on the economic system. This will keep on brimming the monetary circulations with the changing trends.
