Do you need extra money to go towards travelling, a medical emergency, or for any other reasons? At that point, it becomes pivotal that you choose the right type of loan – cash loans or credit card. Both have their benefits and drawbacks. However, the trick is to use them to your advantage. A credit card is excellent for a short-term loan, whereas, cash loans are ideal if you are looking to pay over a longer period of time. Following a few of these tips it will help you understand the different types of loans and decide which is better.
What is a Credit Card?
The credit card is a convenient way of paying money online, at a store, or to a person. You can swipe the card with a POS machine at the seller and pay for your purchases; however, not paying the bill on time can result in substantial interest rates. Here are some benefits of using a credit card.
- Easy to apply, and you can get the card almost instantly — you have the choice of using it whenever you want.
- You can apply for the card online and can obtain it at a reasonably low credit score.
- Some credit card companies offer 0% interest rates from 12 to 21 months.
How to Use Credit Card to your Advantage?
Here are some suggestions when you should use a credit card.
- Use the card when you are sure you can pay off the entire amount every month.
- If you want to pay the minimum amount and increase the option of payment whenever you want, then a credit card is ideal.
- If you cannot obtain cash loans.
- When you do not have a collateral to pledge.
What are Cash Loans?
Cash loans are personal loans that can be availed online and are a much better option than credit cards if you have a good credit score. They are available at a relatively low interest rate, and you can choose to pay the loan over a long period. There is much flexibility with this type of loan, you can avail the credit within a few hours. Cash loans can be used to secure urgent cash requirements such as for renovation of a house, medical emergency, travel, and others.
The point where credit card and cash loans differ is you can get a huge chunk of money at once with cash loans while with credit cards, you pay for purchases. The repayment period of cash loans is anywhere from 2 to 10 years, at a fraction of the interest rate when compared to a credit card. With the personal loan, you have the option of choosing secured or unsecured loans. Here are some benefits of personal loans.
- Lower interest rates.
- The loan is available online, at a bank, or credit unions.
- Great for consolidating debt.
- You can get both secured and unsecured loan.
How to Use Cash Loans to your Advantage?
Here are some ways or situations when you can use a personal loan.
- Flexbile repayments and a lower interest rate over a longer duration
- Easy to apply.
- Receive the funds fast which are great for emergencies.
- No hidden fees.
- Loan amount can be increased over time.
With this differentiation, we hope that you are empowered to make the right decision while choosing a loan to fund your financial needs.