Credit Cards vs loans

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For the ones who are into financial deals or keep a habit of spending and investing, the debate between Credit Cards vs. loans. Would you need an unsecured loan for a short-term period? If yes then you can think about a personal loan or might consider using a credit card as well.

The best Option

The credit card as well as a loan, would offer you a cash amount, which is unsecured, when you need it the most. Whether you want to buy a car or want to buy any other goods, the cash that you would use via the loan and well as the credit card would might just be apt to clear if there is any initial down payment that you would have to make.

There are several advantages of Credit Card and disadvantages of loans and vice-versa. While making a decision you need to choose which one would be correct for you.

Analyzing the Pros and Cons

Every financial decision has its own call. No two policies are same. To state in simple terms, a financial decision might be good for you but not your friends and acquaintances. There are quiet a number of pros and cons for personal loans as well as using credit cards. Let us have a look at them.

Personal Loans Pros
  • There are competitive interest rates.
  • The loans have got a fixed interest rate and you need to pay it monthly
  • The procedure is accessible and quick for most of the customers.
  • Personal loans provide you with a range of repayment terms and conditions that are designed keeping in mind individual requirements and budget capacities.
  • There is upfront cash in order to settle bills and expenses.
Personals Loans Cons
  • When you apply for personal loan there is usually a long application procedure at work.
  • Loans are slightly difficult to secure as compared to a credit card.
  • The ability with which you can avail fast cash via credit card or personal loans will differ as per your financial needs. However, it is always imperative to weigh and assess all the options prior to applying for a loan.
Let us now have a browse over the pros and cons of availing cash through Credit Card.

Credit Cards Pros
  • Credit cards are easy and simple to use.
  • There are flexible credit lines.
  • The rate of interest is low
  • There is zero penalty in case there is early repayment
  • There is low payments for those months when the financial condition is tight.
Credit Card Cons
  • At times there are increased rates of interest, more so in the case of cash advancements
  • You need to incur the high rate of interest in case the payments are not in time.
  • When you make fewer payments, then the loan period will stretch for a long time.
  • Creditors might at times increase the minimum payment ratio or rate of interest
These would be some of the essential pointers when you are discussing the various aspects of Credit Card vs. Loan.

Last Updated on 05/03/2010