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webmaster · Joined: 03 Oct 2007 Posts: 2 2.19 Dollars($)

Hi,
Do you think personal loan is better than credit card?
Financial security is should not be taken for granted. It is important to be educated about loans for personal debt and easy personal loans before you make any decisions that may affect your personal credit. Having a good credit rating throughout life is important whether you are applying for a mortgage or buying a car or going to school. In order to facilitate your financial future, weigh your options before securing any personal loan or credit card. But i am not sure in this case.Can you tell me which is better personal loan or credit cards? Question

jerry · Posted: Wed Oct 03, 2007 4:36 am Post subject: RE: personal loan vs credit card

Hi Webmaster,

Welcome to the forums.

I feel both are essential but it may differ from one person to another as to whether a personal loan or a credit card will be suitable for him.

One problem that one may have with credit cards is that one gets the access to easy money quite often which isn't possible in case of a personal loan. This often leads one into trouble in the sense that he/she may not be able to control spending and take out too much of cash through credit cards. But that's not going to happen with a personal loan.

Thanks,

Jerry

Guest

Hi,

It is true that credit cards provide an easy access to money but if you consider loans then I think personal loans are better. Personal loan interest rates are generally lower than the credit card rates. In that case, one may take the help of personal loan even to pay off the credit card debts.

evolovik26 · Posted: Wed Oct 03, 2007 6:51 am Post subject:

Each serves a different pupose
A personal loan typically will have a fixed interest rate and will get you a lump sum of money. (Good for improvements, taking care of some incured bills, consolidating your debt) It will be treated as an instalment loan for reporting purposes on your credit report. A personal loan is easier to keep track of as you will likely consider your budget before getting one.

A credit card is more for a convienience of day to day transactions. It has an adjustable rate and the avalable limit will adjust with time as well. It is a revolving line of credit for the purposes of credit reporting and does not have a preset payment (you pay for what you spend) If used with care a credit card can allow you for great convinience and if you pay it off at the end of the month you dont have to pay interest. And you are not forced to carry cash around.

livinginnky · Posted: Wed Oct 03, 2007 9:19 am Post subject:

It depends on...
1. What you are trying to do
2. What are the total costs involved for each
3. What are the interest rates for each

A personal loan might be better if you need the money immediately. However if you need money over time a cc may be better.

Explain your situation a little more.

Guest

It depends on the scheme that you are opting for but generally personal loans are better as the lone rates are lower than credit card.

jenkin7 · Posted: Fri Oct 12, 2007 12:15 am Post subject:

Hello,

The concept of "revolving credit" associated with credit cards is interesting. You have a particular spending limit which you can spend any way you like and then repay the debt you owe. You can continue to use your credit even after that and your spending limit is can also be increased from time to time.

Personal loan, on the other hand, is a fixed amount approved by your lender. You have to repay the loan within a fixed period of time, say 12, 24, or 48 months. Once you repay the loan, you cannot use this money anymore. If you want more, you have to apply for it once again.

Posted: Wed Jan 23, 2008 8:21 pm Post subject:

Depends on the loan amount and time to payback. Sometimes you can buy things at department stores like lowes bestbuy and others on same as cash offers for 6 months to year without interest. What your buying and where factor in.

patricia · Joined: 16 Jan 2008 Posts: 133 0.94 Dollars($)

In my opinion take a credit card with a low limit that way you won't be tempted to over spend. reaserch them well and get one with 0% apr for as long as you can. (a year if you can find one)

dcrum0 · Joined: 18 Feb 2008 Posts: 19 10.23 Dollars($)

If you have good to excellent credit it's still pretty easy to find a 0% interest credit card for 1 year. Just be careful to pay off the entire balance before the 1 year expires or they can hit you with some heavy interest.

Also, be careful not to put any other balance on the card if the 0% interest rate period has expired. If so, any money you pay toward the balance will go to the 0% interest and you will have to pay interest on the high rate until the 0% balance is gone.

The downside to any credit card balance is that they offer the minimum payment option. It's very easy to only pay that mimimum balance and carry over a balance from month to month. This is how they make their money and the interest rates are usually much worse than horrible!

With good credit you can usually get a personal loan for less than 10% interest (compared to 20%+ of credit cards). The personal loan will have a fixed amount of time to pay back the loan as well as a fixed rate. This will force you to pay back the loan in a certain amount of time and not allow you to spend more than you can really afford.

I avoid a revolving balance on credit cards as well as stay away from personal loans. Keep that emergency fund around and always pay cash when possible! You will save 1000's!

adonis · Posted: Tue Feb 19, 2008 4:36 am Post subject:

Great advice dcrum.

Paying more than the minimum payment helps one to avoid having a higher loan balance each month. And then if you are in financial trouble and it's time to pay the entire balance, how do you do so? it becomes very difficult to arrange for the cash then.

Oh by the way dcrum, did you introduce yourself at http://www.mortgagefit.com/introduce-yourself-4.html .

This is a wonderful platform that Brian has provided us with. The whole community gets to know you so easily. Smile

patricia · Joined: 16 Jan 2008 Posts: 133 0.94 Dollars($)

I always try to pay the apr first then pay the minimum so that goes toward the balance.

Posted: Fri Feb 22, 2008 6:56 pm Post subject:

Never use a credit card unless you can PIF at the end of the month. Before I make a big purchase, I save the cash, then use 0% longterm offers and pay in full before maturity. This allows your money to earn interest until you pay. Never use CC's to pay for stuff before you have the cash.

patricia · Joined: 16 Jan 2008 Posts: 133 0.94 Dollars($)

That sounds like the whole point of having a cc. If you had the cash why use a cc? If I could do what you say I would get rid of my cc. Rolling Eyes

enriko · Joined: 05 Mar 2008 Posts: 67 0.07 Dollars($)

i would prefer credit card simply because you dont have to overspend:)

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which is better personal loan or credit card?