Credit Cards vs. Consumer Loans – Credit Cards or Consumer Loans?
Many people wonder what is best to buy, a credit card or a consumer loan. There is no facile answer to this. It all depends on your personal finances and your needs.
Here we will explain the most central differences between the two. Credit card or consumer loan? Get help choosing here.
Credit Cards vs. Consumer
When deciding whether to apply for a consumer loan or a credit card, one must consider, however, one’s own needs. One must consider the loan / credit amount against the repayment period and also other factors that may be involved. For example, whether it is an ongoing need or a lump sum.
It is clear that a lump sum can also be broken down to cover, for example, an ongoing need from month to month. Other factors that come into play are of course what will be the cheapest solution for you and other things like discounts or other benefits related to the deal you sign.
What is what should decide whether to apply for a credit card or a consumer loan is the repayment period. If you know that you have to pay down your credit or loan over time and it is not an amount that you can make up for example monthly you should look mostly at consumer loans.
This is because the effective interest rate on a card will often be higher if you have to pay down part of the amount after maturity. Most credit cards give the customer very good interest terms with 30 days maturity but after maturity the interest rate increases.
So if you are going to borrow a larger amount or are aware that it will take you several months to repay, it is often a consumer loan that is the cheapest, on the other hand you need a smaller amount or something that you know you can pay off quickly possibly a running expense then one should look most at a card solution.
Why choose your credit card?
If, for example, you have a monthly need for money that you know you can also pay at maturity monthly then the credit card is often the best solution. This is because there are many other benefits of card use many are not aware of. As mentioned, there are often benefits such as fuel rebates, other discounts on trade in goods and cards with travel insurance.
Most people do not realize that using a card correctly and always paying what you are due in due course can be very good money to save by using their credit card. And, as known money saved, money is earned.