Personal Loans vs. Credit Card Debt: Which is Best and When?
Posted on: 04 April 2017 by Yasmine Carr
You're trying to make good choices. So, when is it best to take out a loan, and when should you throw it on your card? Find out here.
Choosing between a personal loan and a credit card can be tough.
Lucky for you, we're here to help you take the guesswork out of deciding whether a personal loan or a credit card is the best financing option.
Now, let's a closer look at how personal loans and credit cards work.
What Are Personal Loans?
Personal loans are great for those who need money fast.
In many instances, you can get a personal loan in as little as 15 minutes. Plus, personal loans are available from $100 to $50,000 and can be used for a variety of expenses, including:
- Car repairs
- Home maintenance
- School tuition
Perhaps best of all, no credit check title loans make it easy to borrow money fast and hassle-free.
These title loans enable you to use your clear vehicle title as collateral.
In addition, you can start your loan application online, over the phone or in-person.
To apply for a personal loan, you only need to fill out an application. Then, you'll receive an estimated loan amount.
If you decide to accept a personal loan, you only need to bring your vehicle to a credit check title loan store for a quick inspection. After that, you'll sign the loan documents and get your cash.
What Are Credit Cards?
To better understand the importance of credit cards in the United States, just consider the following statistics from the Federal Reserve:
- In 2015, credit card payments hit 33.8 billion nationwide. Comparatively, credit card payments totaled 6.9 billion in 2012.
- The total value of credit card payments in 2015 was $3.16 trillion, compared to $0.61 trillion in 2012.
- Nationally, credit card payments were the second-most popular by number in 2012, behind only debit card payments.
The advantages of credit cards include:
- Convenience: Credit cards are simple to use and enable you to pay for items without cash.
- Easy to Track: Credit card companies send monthly statements, making it easy for anyone to track purchases.
- Bonuses: From frequent flier miles to gas discounts, using a credit card on various purchases may help you earn additional rewards or savings.
Don't expect credit cards to go away anytime soon.
As more people search for quick, easy ways to make purchases, the number of credit card users may continue to rise in the United States.
Which Is Better: Personal Loans or Credit Cards?
In many cases, personal loans may prove to be a superior choice over credit cards for two reasons:
- Interest Rates: Credit cards often are one of the most expensive forms of financing and have higher interest rates than those associated with personal loans.
- Revolving Debt: Credit cards have "revolving" debt, which means the amount available to you depends on how much you spend and how much you repay. Meanwhile, personal loans provide you with a lump sum.
On the other hand, if you need short-term financing, credit cards may be ideal.
Credit cards can be worthwhile if you need to make a small purchase and know you can make your payment on time.
Consider personal loans and credit cards closely, and you'll be able to make the best decision based on your individual needs.