Whenever debts are concerned, credit cards and short-term loans will always be tackled. These debt instruments are popular choices among many borrowers, and they can be used for various reasons. A credit card lets you draw ‘virtual cash’ and enjoy several privileges, but the penalty for non-repayment is too high. A short-term loan, on the other hand, is very convenient and can be used for financial emergencies, though interests can sometimes go beyond expectations. If you want to choose between a credit card and a short-term loan, you should analyze these factors:
It’s undeniable that short-term loan application is five times easier than credit card processes. Short-term applications can usually be finished within a day, and you’ll get your money quickly. Credit cards, even though they’re frequently offered by persistent agents, may take a while before you can gain real benefits. Also, if your credit rating is not at par with the company’s measuring stick, your application will be denied. If you need money fast, look beyond credit cards and go for short-term loans instead.
For requirements, short-term loans get another point. Short-term loan lenders typically ask for IDs, government documents, income statements, and employment certificates. Other than those, nothing might follow. Credit card companies and banks will ask you for tons of requirements. They may require additional pictures and documents – on top of interviews. So, if you’re applying for credit cards, you need to be very patient.
If you’re going to compare the value of short-term personal loans and credit cards, the latter will win by a margin. Credit cards are powerful debt instruments that can bring numerous advantages if used properly. You can even use a credit card to finance an investment or boost your credit score. Short-term loans are meant for short-term purposes only. Once you’ve paid off the loan, there will be no more benefits or advantages – the deal is complete. Don’t worry though – you can always reapply for a short-term loan if you’re a good payer.
In terms of repayment, short-term loans are easier. More often than not, the rates of these loans can fit within anyone’s budget, but it all depends on the loan amount that you’ve chosen. Credit card rates might scale up depending on market factors, your chosen product, and other perks included. Your average spending rate will even be included in the equation. Such difficulty eventually led to many borrowers defaulting on their credit cards.
While getting a credit card is not a bad thing, you should weigh your options carefully. A credit card can bind you to a year-long agreement, while a short-term loan is more manageable. These debt instruments are totally different but they still have one thing in common: you need to pay them back. Don’t miss a payment schedule or you’ll face tons of penalties – along with a drastically reduced credit score. So, always plan ahead if you have a debt!