Credit card or consumer loan?
A credit card and a consumer loan are two different ways of borrowing money and they provide different benefits. Which of the two is best suited for you depends on your need and purchasing pattern.
A consumer loan is a good alternative to a credit card if you want predictability with your monthly expenses. A consumer loan provides a set plan for your monthly down payments which gives many a sense of security. You can arrive back from a vacation paid with a consumer loans and not expect any surprises. You will simply start paying back a pre decided amount each month.
A credit card provides a lot more flexibility in that you can decided how much you want to borrow and how much you want to pay back every month. As long as you stay within your credit limit you have the freedom to decided how much you want to borrow and how much to pay back each month. However, flexibility can tempt some to spend beyond their means. A credit card is therefore more demanding since you need to be in charge of your own spending and what you owe.
Summed up a consumer loan is the best choice for large purchases that you plan to pay down over a longer period of time, while a credit card is best for smaller purchases that can be paid back relatively quick.
About consumer loans:
- Good for someone who wants to borrow a one-time amount that you pay back following a set down payment plan. A consumer loan provides structure and predictability in your finances and you know exactly how much you need to pay back each month.
- Lower interest than credit card debt.
- A consumer loan enables you to refinance smaller and more expensive loans.
About credit cards:
- Good for someone who prefers flexibility as it gives you the opportunity to borrow as you go as long as you stay within your credit limit provided.
- Offers a no interest period between 30 and 52 days
- You decided how much you want to pay within a certain time frame
- The card may give you additional benefits such as bonuses and discounts in stores, restaurants, online and other partner benefits
- Most often a credit card includes travel and cancellation insurance