Personal Loan Vs Credit Card

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Borrowing money is the most viable method hence, which comes in two ways: Personal loan and credit card. While credit cards are ideal for short-term expenses, personal loans are a better choice for long-term expenses. Both the financial instruments have their pros and cons, but your decision of selecting between a personal loan and a credit card would depend on the following reasons: Your credit card score How much cash you want to borrow? How long will you take to repay it? For more info, please visit us at https://us.afinoz.com/blogs/personal-loan-vs-credit-card

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KNO W A BO UT THES E THINGS CR ED I T S CO R E H O W M UCH CAS H YO U WANT TO B O R R O W H O W L O NG W I L L YO U TAK E TO R EPAY I T Personal Loan Vs Credit Card - Which is the Best for You

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How does credit card work  Unsecured Credit Cards: Credit card offers you a line of credit that is used for daily purchases and monthly bill payment without any security. Many credit cards come with rewards such as a discount on retail shopping bonus points on travel and dining and cash back at the gas station grocery stores restaurants etc. The typical rewards range from 1 to 2 of what do you spend. When you are using a credit card you will need to make at least the minimum payment every month by the due date.

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Secured Credit Cards: There are usually unsecured credit cards available but you can take the secured credit cards also. Secured payment used as collateral on the account back up thse secured credit cards. These secured credit cards are backed by the secured payment used as collateral on the account. There are several benefits of secured credit card and they are as: • If you don’t qualify for an unsecured credit card secured card can be a good option as you look to improve your credit score. • You can make emergency purchases which might not be possible with unsecured ones. • Secured credit cards are available for lower fees than unsecured credit cards • Many of the lenders provide the interest on the security deposits also. • Easier approval than most desirable unsecured cards.

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How does a personal loan work  A personal loan is the type of unsecured loan signature loan which helps you meet your current financial needs without any security. It is given on borrower’s credit card history and their capability to return the money from their personal income at a fixed interval of time. If you have a good credit score you can get the personal loan in a couple of days. Personal loans nowadays are planned in such a way that it will be budget friendly. You can get them at the fixed interest rate and for the fixed monthly installments. The rates of interest are subjected to vary from lender to lender.

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Difference between Personal loan and credit card S. No Personal loan Credit Card 1 You cannot increase your loan amount once it gets sanctioned. You can take as much loan until your card limit is maxed out 2 Borrowing limit can be up to 100000 Borrowing limit can be high as 50000 3 The interest rate is fixed according to individual financial firms. The interest rates are variable. 4 Lower interest rate Interest rates are usually higher than personal loans. 5 Funds disbursement will be lump sum upon approval. Funds can be taken out at any time according to your need. Cash advances are also available.

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Pros and Cons of Personal loan Pros:  There is no restriction as to what the loan amount can be used for. You can use your personal loan for your personal expenditure.  It will come with lower interest rates as compared to credit cards i.e. low.  If you have good credit card score you can borrow up to 100000.  Affordable monthly repayments according to your convenience.  Good for long-term purposes

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Cons: • The minimum loan period means that you have to carry the debt for minimum one year or more. • It will take minimum two to three days for process. Includes documentation. • In some cases payments are inflexible which means you cannot pay before the fixed period.

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Pros and Cons of Credit Cards Pros:  You can use the credit card for immediate purchase according to your need.  Credit cards come along with specific rewards points depending on financial firms.  It is a convenient option if you need a constant cash flow.  No need to undergo unnecessary documentation.  Interest- free grace period is available.  The credit amount is transferred at any time.  Good for short-term purchases. Cons:  A credit card usually carries higher interest rates.  Revolving credit makes it easy to spend beyond your limits.  If you need the cash advance typically you should pay two to four percent.

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Personal Loan Calculator  Start the calculator by entering the amount how much you want to borrow. Then follow the steps:  Enter the loan amount and your payback period in years or months.  Calculate the ideal interest rate on your loan amount.  Finally you can see how much you need to pay as principal and interest.  Once you have stimulated different scenarios with the personal loan calculator compare your best loan offers from various lenders.

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Read More All About Personal Loan 2019: Fulfill Your Aspirations with Personal Loans Cash-Secured Loans: Your Best Bet for Availing a Personal Loan Personal Loan to Pay Medical Expenses

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