Times are tough for everyone right now – even those who make good money. If you have found yourself in debt that you can no longer cover, there are a few different ways you can go about getting the money you need. The two most common options are personal loans and low-interest credit cards, both of which come with their own unique advantages. Let’s do a quick comparison of the two options to determine which one is right for you.
You can get high-dollar loans just as easily as you can get high-dollar credit cards, depending on what your credit looks like. In some cases, it is easier to get a big credit card than it is to get a big loan because you may not necessarily spend all of the money on your credit card. In other words, you may only use $5,000 of your $25,000 spending limit, even though you have the option to spend more. Credit card companies rely on this idea and therefore may give you more spending power than a bank.
As a whole, bank interest rates are going to be lower than credit card interest rates. However, if you specifically focus on finding a low interest credit card, you may not have to worry about that much. On top of that, the credit card company isn’t going to charge interest if you pay back your balance right away. Thus if you just need to make a quick payment that you can cover the following week, a credit card is going to be the best option for you. Just be leery about variable interest rates, as those can cause you to pay a lot more money without any warning.
Loan payments are always higher than credit card payments, which may matte to you if you need a long time to pay off your loan. Rather than paying several hundreds of dollars a month, you might end up paying $30 a month to keep your card in good standing. Granted, paying the minimums on a credit card will not allow you to get it paid back. You have to put some money toward your principal balance, or you’ll just be paying interest every month. Nevertheless, if you need a break to get your finances situated, a credit card will give you the flexibility to do that.
For the most part, it is easier to swipe a credit card than it is to transfer money from a loan into something you can pay with. There are some banks that will deposit the money directly into your account, but others will issue a check or open a new savings account for you. It is a little harder to keep track of spending with a credit card than it is with a bank account, but you can review your statements online with either. It all depends on what works for your lifestyle.
With the number of benefits coming from personal loans and low interest credit cards, it is important to think about which one is best suited for your lifestyle. Once you come up with a decision you’re comfortable with, pursue the money you need right away.