Personal Loan vs Credit Card Loan: The uncertainty of life opens doors to the unforeseen things that can happen in life-financial emergencies that include medical bills, repairs, or expensive travels. It makes it quite confusing to choose between a personal loan and a credit card loan at a time like this. Both have a fast source of money for urgent needs, but they have their pros and cons.
Banks and other financial institutions give personal loans in a manner not secured to vehicles by fixed EMIs and repayments. The most inclusive expenditure here is anything from major medical treatments in the form of home rehabilitation.
Pros:
– Lower interest rates than any credit cards (secured: 10%-18%)
– Fixed schedule makes it easy to budget
– It is possible to borrow larger amounts
– Longer tenure (up to 5 years or more)
Cons:
– Might need formal approval and documentation
– Takes longer to disburse than a credit card loan
The loan or cash advance allows one to borrow against the credit limit of a card. Best for the immediate little expenses.
Pros:
– Instant access to cash
– No additional documentation is required
– Flexible repayment
Cons:
– High-interest rates (24%-36% annual interest)
– May incur additional fees for cash advances
– Shorter repayment tenure
Credit card loans are quite convenient for minor urgent expenses and a shorter repayment period, but this could only add to the stress with high-interest rates since payment is delayed.
For really large emergencies, taking a personal loan is a cheaper and more secure option since repayment could be fragmented.
Also Read: Credit Score vs CIBIL Score: What’s the Difference?
Both personal loans and credit card loans significantly play roles in emergencies. Evaluate the urgency, the amount, and how much you are willing to pay back before making a decision. Make the right choice to ensure that an emergency does not become a long-term crisis.
Share
Man Feeds Colleague ‘Truth Serum’ to Uncover Job Secrets
Kota Srinivasa Rao Demise: TFI & Leaders Pay Tribute
