When you need money urgently, you usually tend to take the help of your credit card as it would give you an immediate credit without the need for any security. But that is not the only option that you have. If you want a significant amount of money, then another option that you have is the personal loan. But there is always confusion among people about which option is better. You need to check out the advantages and disadvantages that you get with a personal loan and a credit card and make your decision accordingly.
A personal loan is a lump sum amount that you take from a bank or a lender at a certain interest rate and a fixed duration in which you have to repay the amount. But that is not the case with a credit card. With a credit card, you would have a maximum limit that you cannot cross. But inside that credit limit, you can rotate your finances so that you can always pay when you have the money. There would, of course, be a certain minimum amount that you need to pay every month to ensure that the credit card does not get blocked.
A personal loan is the best option to take when you have a large expense and also when it is a one-time expense only. In fact, when you take a personal loan in such cases, you would be able to decide beforehand the duration that you want to pay it back in. Depending on the duration you choose, your EMI would be decided which is a better option than using a credit card. But when you use a credit card for such expenses, you would be stuck with the minimum payment schedule and you would not be able to make any progress in paying the full amount.
In a case where your expense is relatively smaller, you can take the help of your credit card. Even though you would still have to repay it and maintain the minimum payment schedule as well, the money you owe would be relatively smaller. If you take a personal loan for a smaller expense, you would not be able to apply for another loan until you pay off the present one. Therefore, if there is a need for a greater expense, then you would be left stranded as you would not be able to get the money that you need.
Irrespective of whether you use your credit card or take a personal loan, you need to ensure that the interest that you pay is as less as possible. Therefore, you need to do enough research before you decide which bank’s option to choose. It is important that you make a smart choice so that you do not fall into a quagmire of financial ruin where you end up wasting a lot of money on financial charges. So, make sure that you plan your finances better and you would be able to live a tension free life.