We all need a little helping hand from time to time, and our finances are no exception. The complexities of making expensive purchases or struggling with various costs and bills can be eased with the help from loans or credit cards. But which is right for you? It all depends on your personal and financial circumstances, as both loans and credit cards have their benefits and disadvantages. If you have an idea of what you need or want from your borrowing source, then you can find your answer. Whether you only need short-term financial help or need to borrow money as soon as possible, your specific needs can lead you to the right option.
“I need to borrow a lot of money.”
If you are in need of a large amount of money, a personal loan could be the right bet for you. You can usually borrow up to £25,000 with competitive rates. However, smaller amounts will have higher interest rates, so a loan of £2000 could end up costing you a lot more than you expect. If you want to borrow a smaller sum, a credit card could have better rates. How much you are able to borrow also depends on whether you are eligible, specifically with your credit rating and if it is strong enough. To make sure you are getting the best deal, compare both loans and credit cards online using a price comparison website.
“I can’t pay it back fully for a long period of time.”
Before you take out a loan or credit card, you should figure out how long you will need to make the total repayment. Loans are often a lot more flexible than credit cards and can let you decide how long you will need to pay it all back. You can spread the payments over several months or years, with set monthly payments. This should be organised when you are taking out the loan. If you are in the middle of repayments and find that you need more time to pay back your loan, you should contact your lender as soon as possible to arrange an alternative payment plan. Credit cards will have no definitive end date for repayments, but can be less flexible with monthly payments and can have high interest rates.
“I have a bad credit score.”
With a bad credit score, borrowing money can be very tricky. Taking out a loan will be especially hard as you will need to pass a credit check. You will still be required to go through a credit check for a credit card, however there are some credit cards specifically created for customers with a bad credit rating. They will have high interest rates, but if used correctly can help you to boost your credit score, while giving you a financial helping hand.
“I need money fast.”
We’ve all been in a situation when we need money, and we need it fast. It could be for an urgent last minute purchase or emergency bill that needs sorting as soon as possible. Credit cards can take up to 10 days to be processed and send out to you, making them a potentially slow option. However a loan can be an almost instantaneous, with the money going into your bank account within 24 hours of approval.
“I want protection on my purchases.”
To make secure purchases, a credit card is your best friend. If you buy something between the cost of £100 and £30,000 using your credit card, your purchase is protected and if anything goes wrong with an item (such as the company going bankrupt before your item reaches you), your credit card provider and the retailer are both liable and you are entitled to a refund.