Personal Loan vs Credit Card

Credit cardsWhen you borrow money, two of the most popular are personal loans and credit cards. It seems like this would be a simple decision, but there’s a lot to consider before choosing a personal loan or credit card. We’re comparing these two financial options to give you a better idea of what each can offer you.

Credit Cards

Credit cards are a convenient way to borrow money, and they’re fairly easy to get. You’re able to use credit to buy or pay for whatever it is you need within your credit limit. One pro and con of credit cards is that you’re not required the pay off your balance. You must make minimum payments every month, but credit cards can result in revolving debt. You might pay down your credit card bill but then spend on your credit card or take out a cash advance, so your balance fluctuates.

Credit cards are typically unsecured, which means they’re not backed by any type of collateral, such as with a title loan. Credit cards are useful for short-term financing, and you should only use a credit card when you know you’ll be able to pay off the balance. They often have higher interest rates, so you could be paying much more if you don’t pay off the balance on time.

Personal Loans

There are both secured and unsecured personal loans. These often come with a lower interest rate than credit cards, especially if your credit score is higher. While a credit card is revolving debt, a personal loan is installment debt. This means that you get your money upfront in one lump sum, and you have to pay it back over a specific period of time. These loan payments will include both principal and interest.

One of the benefits of personal loans is they can be acquired in small or large amounts, depending on how much you need and what you need it for. This type of loan is a better option if you know you won’t be able to pay off your balance each month.

You might also want to look into getting a personal loan if you’d like to try and get a lower interest rate by consolidating your debt.

Get a Personal Loan With Xpress Cash

When you compare a personal loan vs credit card, you might agree that a personal loan is the smarter financial choice for your situation. You are approved for a certain amount, and you can’t take out any more than that. You have a timeline for repayment, so you can make a plan to repay your loan on time. To learn more about personal loans or to apply, contact us or visit one of our Xpress Cash branches in person in Michigan, Idaho, or Wisconsin. We can also fill you in on other options for paying off your debts, such as balance transfers.