Cheap Personal Loans vs. Credit Cards: A Comparison

If you are looking for cheap personal loans, you might also be considering using credit cards to finance a purchase. Both of these options are legitimate ways to get access to the money that you need. However, they also have a few key differences that you need to consider.

Convenience

One area in which these two methods of getting access to money differ is in convenience. With a personal loan, you will have to contact a lender and go through an application process. This could take several days or weeks in order to be approved. With a credit card, you can simply pull out your credit card and swipe it in order to get access to the money that you need. You can use the card to get cash at an ATM or you can purchase goods with it wherever credit cards are accepted. This means that if you need access to money quickly, credit cards are going to be the superior option.

Interest Rate

Something else to consider is the interest rate that you will be paying for each solution. In the vast majority of cases, a credit card is going to charge you quite a bit more money in interest than a personal loan would. With a personal loan, you might pay as little as a third of what credit cards charge for interest. This means that you could potentially save a substantial amount of money over the time it takes you to repay the debt. If you are worried about long-term financial implications, you will almost always be better off to go with a personal loan.

Credit History

Something else to think about is the role that credit history plays in this process. Most people, regardless of their credit history, can gain access to a credit card. While credit card companies will not extend credit cards to individuals that have extremely bad credit histories, they are still very lenient when it comes to approving individuals. With a personal loan, this is not the case. In order to get approved for a personal loan, you will have to display a certain level of credit worthiness. Each lender is different, but you will have to have a solid credit score in order to get approved for a personal loan. Most personal loans require very high credit scores because there is no collateral securing the loan. This means that your credit history is the only thing that a lender has to go off of when making a decision. If your credit is bad, you may not have any other choice but to go with a credit card.


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