Are you facing financial difficulties, you need money urgently to solve your problems? Do not worry as you have two choices that are considered salvage for your troubles: personal loans or credit cards. So which option is most suitable for you? Let’s see the answer right below!
The subject of personal loans is probably no stranger to our readers. If you are in need of a personal loan, find out useful information in previous articles such as Instant cash loans, Unsecured personal loans bad credit, Small loans online… Today let’s find out a new financial solution is a credit card.
PERSONAL LOANS OR CREDIT CARDS
Choosing personal loans or credit cards is not easy because each form has its own advantages and disadvantages that are suitable for different uses of money. Therefore, before making a decision for yourself, readers should carefully consider how much money to spend, for what purpose, and how long the refund will last.
1. What are the Personal Loans and how to get them?
The Personal Loans are the form of unsecured debt, meaning that no property is used as collateral for loans. Personal loans are not guaranteed to be risky to lenders as there is nothing they can ask for and sell to meet the outstanding loan in the borrower’s default case.
Everyone can get the personal loans because there are more and more lenders who provide the loans for people with bad credit. In order to get the personal loans, you need meet some conditions that are required by the lender, which are:
- You need to provide your credit score as well as bank documents to verify your source of regular income
- You are residing in the United States
- You are between the ages of 18 and 65 years old
1.1. The advantages of the Personal Loans
- People can get these loans even have bad or poor credit
- Get approved in just a few minutes
- The personal loans can help people in improving the credit history
- Long-term loans
- The interest rate of the Personal Loans are lower than Credit Card
1.2. The disadvantages of the Personal Loans
- Stringent terms loan and conditions loans
- Easy to meet unscrupulous lenders
- The loan amount is less than the use of credit cards
1.3. The Loan term and interest-rate
- Loans: from $1,500 to $10,000
- Typical term lengths can be 24, 36, 38, or even 60 months.
- Interest rate: 5.99% to 35.99%
- Origination fee: none to 4.75% of the loan amount
2. What are the Credit Cards and how to use them?
Credit cards are considered a type of cyclical debt. That means when applying for a card, the credit institution will open a credit card with a maximum limit for you. So you can use any amount to pay as well as purchase. You will then make a payment for that amount using the actual amount of money you have on your credit card at all times.
With a grace period of 25 to 30 days, that is, when you use the money in the card and pay the debt within that day, there will be no interest or fees. Is not it great?
2.1. The advantages of using the Credit Cards
- The credit card is safer than carrying cash.
- Earn reward points when people spend.
- People can request the chargeback if be unhappy with a product or service.
- The credit card can build the credit rating.
- People can consolidate debts and save money on existing balances.
- People can get interest-free days.
- The credit cards work in any currency.
- The credit cards give people the emergency line of credit.
- The credit cards often have complimentary extras.
2.2. The disadvantages of the using the Credit Card
- Cash advance fees and rates
- Paying high rates of interest
- Credit card fraud
- Credit damage
- Annual fees
- Credit card surcharges
- Other fees can quickly add up.
2.3. The term and interest rate
- The periodic rate for monthly interest is: (APR/days in a year) * days in a billing cycle.
- For example: If the credit card has an APR of 15%, it will have a daily rate of 0.41096%.
3. Should people use Personal loans or Credit Card?
With the personal loans, the bank disburses the full amount of the loan in one lump sum payment to the borrower – installment debt. With the credit cards, borrowers are extended a line of credit and can utilize whatever portion of that credit – revolving debt.
The personal loans usually have a fixed-interest-rate for the term of the loans. On the other hand, the credit cards have a variable interest rate, that means the actual interest rate the bank charges can change over time, at any time if the banks re-evaluate your credit.
As we said above, each form of loan or credit use has its own advantages that are relevant to its purpose and ability to pay off debt. For example:
Personal loans are really appropriate if you are in need of a large sum of money and can not pay off your debt in a short time. With loans for several years, credit cards will be subject to very high-interest rates and charges, which have a great impact on your finances as well as your repayment capacity.
However, if you pay for a small item and pay the full amount within a few days, longer than a month or 3 months, then the credit card is the optimal choice. Because of this, if you use a credit card you do not have to pay interest as well as other fees, it is very convenient and economical.
In short, the choice of personal loans or credit cards depends on each person’s ability to pay. Through this article, we hope you readers have chosen the most suitable way to solve the financial problems ahead.
For more information on loans and credit cards, you can visit the Info Credit Free site. Also if you have any questions about the article or loans, credit cards, readers do not hesitate to contact through our email address: [email protected]
Hillary (Team Content)