Advantages & Disadvantages of Credit Card and Personal Loan
CREDIT CARD VS. PERSONAL LOAN – Here are the advantages and disadvantages of credit cards and personal loans.
In the face of financial emergencies, among the things that people can turn to is either using a credit card or applying for a personal loan. These two(2) are also contending options in several other purposes including:
- purchase of a product with big amount
- domestic / international travel
- paying for the utility bills
- paying for hospital bills / medical expenses
Undeniably, people who have credit cards and are eligible for personal loans often have second thoughts on which is the better option to turn to.
In this article, we will discuss the advantages and disadvantages of credit card and personal loan and where each can be used best.
Based on an article on The Simple Dollar, here are the benefits and drawbacks of credit card and personal loan:
CREDIT CARD
ADVANTAGES:
- You can apply for it ahead and use it for emergency purposes only.
- Easy to apply for
- Application can be done online
- Some credit cards offer 0% interest based on certain terms.
DISADVANTAGES:
- If terms come with interest, charges can grow rapidly into big debt.
- There are annual fees, late payment fees, over-the-limit fees, etc.
- May charge big interest on cash advance transactions
PERSONAL LOAN
ADVANTAGES:
- Low interest rates
- Excellent for debt consolidation
- You have choices – secured (with collateral) or unsecured (without collateral).
- Application can be done online
DISADVANTAGES:
- Fixed payment term
- Application may require lengthy credit history
Based on the article, the best time to use a credit card is when you are sure you can pay for the amount quickly and does not want a collateral.
The personal loan is best used for long-term payments and you need a huge amount of money. These are the major considerations in choosing which to use between the two in certain situations.
Thank you for visiting our website. We hope we have helped you with regards to this matter. You may keep coming back for more informative guides.
READ ALSO: BANK PERSONAL LOANS – List of PH Banks’ Loan Offers & Loanable Amounts