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When to use a personal loan instead of a credit card?

Nowadays many of us dream of a world, in which every household expenses would be paid for in cash. You would just open your wallet and take out required cash and that would be the end of the whole process. Of course, the reality is totally different. Few people have enough money in their saving accounts for unexpected emergencies. More and more people without their money on their hand try to put up with personal saving accounts and personal loans. There are many advantages of that solving, but not everyone seems to be convinced to use a personal loan instead of a credit card. This begs to question- which option is better for you?

When to take a loan?

To discuss this matter we need to get through all the options and possibilities that loan gives us. The first advantage is that you can feel safely enough in every crisis. In an emergency you don’t have to be so stressed out- you are assured with some amount of money and you don’t have to worry about your future. The second advantage is that every borrowing method comes with unique terms. Mortgage terms may include a repayment period of long years. The terms affect just how much you have to pay monthly and how long it will take to pay it off. However, event if the monthly payments are low, it’s not actually a winner, when the total cost is very high. But if the more money is needed to borrow from such an institution you have to reapply or complete a new loan application. But there is of course a main big advantage- you don’t have to put up collateral such as house or your car and you use a personal loan for almost everything. You can’t use it only for your educational expenses, gambling and investing- but instead of it you can do whatever you want.

Of course, despite all of this fantastic prepositions, you have to remember that taking a personal loan have drawbacks involved too. Perosnal loans have higher rates than equivalent house loans or car loans. And personal loans are one-time, fixed-amounts transactions. If you need more money for your expenses, yo have to apply for a new loan.

How credit card works?

Everyone knows what advantages credit card involves and what options give us a simple piece of plastic. The main advantage of credit card is convenience- you don’t have to worry about carrying cash wherever you want to go. Credit cards enable you to pay, even if you don’t receive any money yet. If you have to buy something immediately and the payterm is week away, you won’t get stuck with your transaction. Credit cards allow you to spend all your money due to your money limit. Antoher advantage is that payments are due monthly with only a specific minimum required. It prevents you from paying off the full balance. If you won’t do it, you can enter the world of drawbacks involved in this matter. Credit card rates are really high- 15% is common and in rare cases interest can be nearly 80%. They also become harder to pay for as the time goes on. Credit card debt can be hard to manage, so as to assume the whole idea- it’s not for everyone.

What is the best option?

When you don’t have to pay for some expensive expenses a credit card would be a fantastic idea- you don’t have to carry out your cash with you and you can enjoy the great feeling of joy on your basic shopping. It’s actually good for every person that makes up their mind in last minute before doing something very important. A personal loan is better when you want to invest your money and you have a buisness plan that needs to be established or when you have bad credit story to wash away from your bank account. It’s completely non-demanding- you don’t have to meet the requirements of institution that can give you an access to neverending source of money. If you need more than you thought at first, you just need to apply again.

Both credit cards and personal loans have many advantages and drawbacks that could make the right or the wrong option for you. You have to think about it and make decision on your own free mind anyway.

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