Outlook Money
When it comes to managing finances, selecting the right borrowing option can greatly influence financial well-being. Credit cards and personal loans are two popular options for borrowing and both offer different features for different needs.
A personal loan is an unsecured loan that is credited directly to the borrower’s account by the lender upon approval. This loan must be repaid along with interest over the loan tenure as decided between the borrower and the lender.
A credit card is a plastic or metal card that allows its holder to make purchases and postpone payment until a specified due date at the end of the billing cycle. Credit cards function as a revolving credit, enabling one to spend, repay, and borrow again, as long as the credit limit is not exceeded.
Personal loans provide lump sum upfronts. This makes them suitable for unexpected expenses, such as expensive car repairs or home renovations. These come with fixed repayment plans, thus helping the borrower to manage costs over time.
Credit cards are useful for everyday needs, which include grocery purchases, fuel expenses and regular online shopping. Credit cards allow the holders to make purchases and pay for them at a later date without having to apply for a loan every time.
If the card user pays off debt in full before the due date, then it can be converted into a short-term, interest-free loan. By doing this, a user can avoid paying interest on the amount due.