Credit

What is the Difference between Personal Loans and Credit Cards?

Written by Garrison Santino

The dilemma in choosing between a personal loan and credit card when you are in a desperate need of money roots down to a few key factors. The article below lists some things to consider before choosing one amongst them.

Comparing Costs

When it comes to comparing credit cards with personal loans, there is a multitude of upfront costs and fees involved that should be considered to find the best choice among the two. These costs include application and annual fees that may vary from product to product. Almost every personal loan charges an application fee, whereas it is easy to search for credit card options that do not but this doesn’t necessarily mean that credit cards are better than personal loans in the long run.

To ascertain the long term value of each, it is crucial to compare the interest rates involved in both the subjects so that it becomes easier for you to calculate how much you will have to pay back over a set period of time. The annual fees should also be compared when it comes to deciding on the best amongst the two. Information on interest rates and ongoing fees can be ascertained by using credit card calculators and personal loan calculators. Also, if just in case you get into a bad credit and cannot get a personal loan, fret not. It is now easy to get Bad Credit Loan from BC loans with instant approval.

The Less Obvious

When comparing the best among the two, you might be tempted to use a credit card which offers an interest-free introductory period. But it is important to weigh the potential interest costs of these offers. Usually, when the introductory period expires, you will be paying hefty fees that weren’t apparently obvious. Instead of being tempted by such offers, consider:

Borrowing period: if you are in a huge debt, you might be having a huge interest rate on your credit card than a personal loan that offers you less interest rate over the life of a loan.
Spending habits: if you are a huge spender and always pay your debts on time, then credit card is a good option. Many personal loans charge you a penalty, if you repay early. But if you are a huge spender and do not pay off your debts on time, do not consider getting a credit card.

Conclusion

If you have made a choice to choose between personal loans or a credit card, it is time to evaluate the products available in the market to get yourself the best deal.

About the author

Garrison Santino