Plastic Personal Loan
There are many different types of finance available for consumers with good credit these days, and amongst the most popular forms of credit are credit cards and personal loans.
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There are pros and cons to both of these types of finance, and in order to determine which will be best suited to your needs and pocket you need to assess your situation and circumstances, and also base your decision on what you need the finance for.
Consumers with bad credit will often find that they are not eligible for credit cards with competitive rates or for unsecured personal loans, but those with good credit can enjoy the luxury of choice, and could save a packet by selecting the right finance option.
Although credit cards are often associated with high interest rates there are some very good deals available out there for those that take the time to shop around and compare. You will find some very low rate credit cards on offer on today’s market, although you should bear in mind that some do have eligibility requirements such as minimum salary requirements.
So, if you have a number of high interest credit cards that you want to pay off you may find that it is more cost effective to transfer the debts onto another credit card that offers a low interest rate for the life of the transferred balance rather than taking out a personal loan to pay off the credit cards.
The benefits of plastic over personal loans is that you can find cards that offer interest rates that are even more competitive that personal loans if you look around, you can enjoy the flexibility of making smaller or larger repayments each month depending on your finances without being penalized for it, and you can also pay off the card in full at any time without incurring any costs.
With a low rate for the lifetime of balance cards you can also avoid the risk of suddenly being hit with high interest rates, as you would with 0% interest cards, which only offer a limited interest free period before reverting back to the standard interest rate.
One of the disadvantages of using plastic over personal loans is the temptation to spend on them, which can quickly add to your debt and can make it difficult to get out of debt. The temptation to make just minimum repayments each month is another problem, and for those that do not try and make larger repayments each month the debt could go on for years.
With personal loans you can enjoy set, structured repayments, so you know exactly what you are paying each month and therefore can avoid the temptation to pay only a minimal amount. You will also know exactly when the loan term ends and when your debt will be paid.
On the other hand, you may find that you are penalized for repaying the debt early or making larger repayments, which makes it difficult to get out of debt earlier than expected if you suddenly find yourself in a financial position to do so.
Quite often a credit card can prove to be more effective than a personal loan, as well as cheaper, but you do need to make sure that you use it sensibly. If you are likely to make no more than the minimum repayment on your card, or you are likely to start spending on it on a regular basis, then the chances are you may be better off with a personal loan.
This is something that you should carefully consider before you make your decision.
To find the lowest rate credit cards visit our
credit card comparison centre
