Personal Loans vs Credit Cards
Personal Loans vs Credit Cards
Whether you’re making everyday expenses, such as groceries or gas, or unexpected ones, such as car repairs – you’re probably accustomed to using your credit card. Just a quick swipe of your card and you’re on your way. But is a credit card always the best option?
While it may not be obvious at first glance, a Personal Loan is often a better financial choice for several important reasons.
Quicker Payoff
Personal Loans have set monthly payments. This is important because it helps you pay off what you owe faster. If you borrow money with a 12 month term, you’ll have 12 monthly payments to make until the loan is repaid.
Your credit card only requires you to pay the minimum payment each month until the balance is paid off. With minimum payments ranging from 3-5% of the owed balance, it could take you several years to repay even a small balance.
Eliminate Extra Interest
Because a Personal Loan has a set time limit to repay the balance, this helps limit the interest you pay. Credit cards, on the other hand, only require the minimum payment each month. This often results in more time to repay the balance – which leads to you paying more in interest each month.
Plus, the interest rates on Personal Loans are usually much lower from the credit union when compared to the high-interest credit cards issued by stores and banks today. Many of the popular rewards credit cards can carry interest rates up to 29.99% APR!
Debt Free Faster
If you have to use credit or borrow money, your first priority should be to repay the balance as quickly as possible; and to do so without paying much in interest. Personal Loans help make this possible; especially if you know you’re not always the best at managing your money.
With set repayment terms, a set amount of interest owed and set monthly payments, Personal Loans are designed to help you repay the balance quicker and are a much cheaper alternative to high-interest store and bank credit cards.
Getting Started
The convenience of credit cards makes them the go-to choice when paying for unexpected expenses. And while getting approved for a Personal Loan does take a little time to obtain, it’s usually a much smarter financial decision.
Financial Access Federal Credit Union is Here to Help.
Each individual’s financial situation is unique and readers can talk with a credit union representative at 941-748-7704 ext. 125 when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.
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