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Credit Card vs Personal Loan: Reasons Why Personal Loans are Better 11 December, 2020   

Both credit cards and personal loans help you access money quickly when you need it, but how do you know which one comes with the least risk? Far too many people have been in desperate need of financial support only to wind up with unmanageable debt not soon after. Figuring out how much you need, what you can pay, and how long you're comfortable holding debt can help you decide whether a credit card or loan is right for you.

There are pros and cons everyone should thoroughly investigate before they make a decision. While getting approved for a credit card can be as easy as filling out an online form, there are also thousands of cards out there designed to keep people trapped in debt. Payment after payment ultimately amounts to little as you're straddled with fees and interest. A personal loan, on the other hand, gives you control right from the start. You customize the terms of the agreement with your lender, and the end result is financing you can trust when you need it most. Let's take a look at some of the reasons why a personal loan is the better option when you're in need of fast cash.

No Hidden Fees

Reputable lenders are fully transparent about all of the costs associated with their contracts. You discuss everything with the company prior to signing anything, and all of the money you owe will be factored into the final balance. This means you will know exactly how much you have to repay rather than struggling to calculate monthly charges along with extra fees and hidden costs. You can explore your options online right now in 60 seconds. Review various offers from trusted lenders to decide which one is best for you.

Fixed Interest Rate

When you sign up for a credit card, you probably expect the reasonable interest rate to stay the same as long as you use the card. Unfortunately, this isn't always the case. Many creditors issue cards with variable interest rates, which they may routinely adjust. The Credit Card Accountability Responsibility and Disclosure Act protects cardholders from having their interest rates changed if they've had their card for under a year as long as they are not behind on their payments by 60 days or more. Most personal loans come with a fixed APR rates, which means that your loan repayment will stay the same for the entire period of the loan and you won't be charged any additional interest during that time.

Build Better Credit

Using too many cards or relying on one to survive can quickly cause your score to spiral. With low credit, you'll have a hard time getting approved for things like a mortgage, a rental lease or a car loan. Personal loans, however, can actually help you raise your score. Charging your monthly payments will actually improve your financial standing. Each one puts you one step closer to paying off your debt while allowing you to use your card consistently.

More Money Upfront

Credit cards do not generally provide financing for large purchases, like a down payment on a house or a car. If you're financing a move, maxing out your card just to get from point A to point B isn't a wise choice, especially when you factor in the interest and inability to repay on time. The amount you can borrow on a personal loan tends to be much higher than a card's limit, especially if you haven't relied on cards before and don't have a strong credit history.

loan personal loan credit card money management

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