Many of us experience coming to a point where we need to resort to borrowing money to keep up with our expenses. Generally, we have these two options – to acquire a personal loan or to use your credit card.
A personal loan is a sum of money that you borrow from financial institutions such as bank, credit unions, and online lenders. Meanwhile, a credit card gives you privileges in return for using it.
But if you are looking to fund huge projects, you might want to consider getting a personal loan. Whether you’re speaking to a boat finance broker for a leisure loan, or you’re looking for a personal loan to cover your everyday expenses, here are more reasons why you should opt for a personal loan over a credit card if you need extra money.
Fast and Convenient
The number one advantage of a personal loan over a credit card is that it’s fast and convenient to acquire. It’s mostly true for individuals who haven’t got any credit cards yet.
Unfortunately, credit cards are often the most difficult to acquire. The requirements are extensive, and credit card companies are very selective as to whom they will grant their card privileges.
But you can easily get a personal loan, especially if you opt to acquire online loans from CreditNinja. These loans are designed to cater to individuals looking for a more customized deal suitable for their needs and current financial situation.
You can also apply for a personal loan with online lenders anytime and anywhere. You will need to access the online lender’s website or application and process your application there. Provide the documents needed, and you are good to go. If you qualify, in less than 24 hours, you can get the money straight to your bank.
Pay Less Interest Rate
Credit cards charge huge interest rates on their consumers’ carried balances. While on a personal loan, you don’t have to pay a high-interest rate for the cash you borrowed, especially if you have a good credit score.
However, even with a bad credit score, a personal loan APR will be 10% or less, unlike credit card APR which is 16.44%. Remember that a personal loan is unsecured, which means it’s not chained to your home or car. You will have to improve your credit score to acquire a better interest rate deal.
Personal loans are long-term loans. The interest rate is customized to be fair and favorable to ensure consumers can pay off their debt. It has no sense at all to acquire a credit card unless you have a 0% introductory APR offer from your credit card company.
You Don’t Need to Handle Variable Interest
Aside from the fact that credit cards charge you a lot of interest, the interest imposed on your balance is variable. A variable interest rate increases over time, making it more challenging to manage your monthly payments.
Meanwhile, personal loans already come with fixed interest rates. As a result, you can ensure that you will repay your debt every month without any difficulties. Furthermore, if you acquire a personal loan over a credit card, you will never have to worry about your interest rate rising in the future.
Avoid Having More Damage to Your Credit Report
It’s already given that every time you apply for a loan, the lender will conduct a hard inquiry on your credit report. It will reflect on your credit history, which could also impact your credit score. However, this impact is nothing compared to what will happen to your credit report when you overuse your credit card.
A higher credit utilization ratio could lower your credit score significantly. The damage it produces can do more than what one hard inquiry will do on your credit report. A personal loan isn’t a perfect financial service like any other. But if you compare, personal loans can give you a more favorable result.
When it comes to debits and credits, the best thing you can do is to choose which one is the least damaging. And in this case, personal loans are more favorable than credit cards.
Personal Loans Have Set Borrowing Amount
Once you apply for a personal loan, you will be applying for a specific amount. And when the lender approves your loan, you will be able to get the entire amount as a lump sum. Meanwhile, a credit card is a revolving line of credit which means you can’t spend more than the set amount on your credit limit.
For example, if you have a plumbing upgrade at your property and are required to pay a lump sum, it would be better to get a personal loan than use your credit card. Your plumbing expenses might require an amount greater than your credit card limit.
In a Nutshell
Personal loans are better in providing you with the extra cash you need. They are fast, have a low-interest rate, and don’t damage your credit report if handled properly. When times get rough and you need extra cash fast, you should opt to acquire a personal loan rather than using your credit card to compensate for your needs.