Credit Card Vs Personal loan- Which suits you most?
The cash crunch is one big problem that comes unexpectedly in anyone’s life. In most cases, the scarcity of the amount of money you need makes you unable to fulfill your desires and achieve your targets by pursuing higher education, buying a new house, making other purchases, etc.
In this situation, people are often confused about whether to choose a credit card or a personal loan. Which credit card or personal loan fits you better to meet your financial requirements?
Keep reading the article to learn about the best investment option between a credit card and a personal loan.
The most important thing you should consider while taking a personal loan is the interest rates against the loan amount. Usually, interest rates charged on personal loans are less than those charged on credit cards.
So, in between the credit card or personal loan, you must choose the option with high-interest rates against the principal loan amount.
Customization of interest rates
If you are applying for a personal loan from a reputed bank or financial institution, you can get the option to customize your interest rate. Borrowers can get two options for a personal loan, one is a secured type of loan, and the other is an unsecured type of loan.
If an asset, known as collateral, backs up the loan amount, you can get the secured loan. The fixed assets are property or fixed deposits. On the other hand, you do not need to give collateral if you want to open your unsecured type of loan.
This type of option is not provided by credit card. So, if you want to choose reliable interest rates, and you should get a personal loan.
You always receive a fixed repayment schedule if you get a personal loan over a credit card. It means the personal loan has come with a fixed end date of payment of every EMI.
But if you choose the credit card loan, you have no option until the payment invoice are not raised by the bank or financial institution. Although this end repayment date comes after the month, the date is not fixed.
In this way, it is difficult to manage the budget if you take a credit card loan. So, it will again be suggested to take a personal loan.
If you are going to take a personal loan for the first time, it involves a lot of paperwork. You must submit a series of necessary documents, like income proof, identity proof, etc.
It means the process of taking a personal loan takes much more time. But in the case of a credit card loan, you can get some relief from time and submitting documents both.
If you take a personal loan, you cannot get the option to make part payment of a lump sum amount. For this, sometimes borrowers face difficulties paying the full loan together.
So, in this case, a credit card loan is more beneficial than a personal loan because there are no strict rules for making part payments.
Finally, it is advised to take out a personal loan. Based on the borrower’s choices and intended use for the loan proceeds, personal loans are a better option.