Credit card or cash loan? Find out which of these options of additional financing is worth choosing.
Cash loan or credit card? Which of these forms of additional financing is more beneficial for us? This article will try to answer this question.
Currently, we have access to a wide range of possibilities of additional financing for our needs and unexpected expenses. The most popular of them certainly include a cash loan and credit card. Nevertheless, do you know in which situations it’s worth using them? What are their greatest advantages and disadvantages? Did you wonder which of these options of financing is the most beneficial for you?
Cash loan – when it’s worth to apply for it?
Currently, the possibility to take a cash loan is one of the quickest and simplest solutions. This form of financing is usually used by people who need quick cash, as well as convenient and flexible conditions of repayment. The maximum amount that we can receive mainly depends on our creditworthiness (income, credit history and credibility). Due to the efficient development of mobile banking, nowadays we can apply for a loan via our computer and even via telephone. The performance of this action shouldn’t take us more than a few or a dozen minutes. Moreover, you can spend the acquired cash loan for any purpose (e.g. dream vacation, purchase of necessary electronic equipment or repayment of previous financial obligations). By deciding on a cash loan, you must remember that at the same time you are making a commitment to the bank that you will pay all installments in a reliable and timely manner.
Cash loan – advantages and disadvantages of this form of financing
The greatest advantages associated with the possibility of taking a cash loan include:
Easy application process and easy accessibility (entire application process can be carried out via the Internet and it takes very little time);
Possibility to receive the decision and money on your account in just a dozen or so minutes;
Possibility to determine the loan repayment period with the bank representatives (the greater the debt, the longer repayment period);
Possibility to adapt the terms of bank loan to our individual needs and opportunities;
You may spend the funds received from the loan for any purpose you choose.
Few disadvantages of the bank loan include:
Additional costs of the loan (including its insurance, commission and annual interest rate);
Obligation to pay regular loan installments. Remember that the reliability with which you make monthly repayments affect your creditworthiness.
Credit card – in which situations it may be useful?
If you’re deciding to choose a credit card, you should remember that it’s only intended for non-cash transactions. However, if you still intend to withdraw money from it through an ATM, then you must remember that you will be charged with a high commission and the high interest will be added to the withdrawn amount. Nevertheless, the credit card can be a lifeline in the case of emergencies, e.g. when your necessary electronic equipment has broken down and you must replace it immediately. Moreover, this form of financing may be useful when you want to go for seasonal sales without burdening your current home budget. Before making a decision about choosing a credit card, you should carefully read the fees associated with its use. Its cost may even amount to several hundred dollars per year.
Credit card – advantages and disadvantages of this form of financing
Unquestionable advantages associated with owning a credit card include:
Ease of its use;
Availability of discount programs;
Access to additional funds in the case of emergency situations (e.g. failure of electronic equipment);
Possibility of building a credit history.
Nevertheless, the disadvantages of this form of financing must be also listed:
Easy loss of control over the spent money;
Relatively high interest rate of the incurred debt;
High fees associated with the use of credit card;
High costs associated with the withdrawal of necessary cash (including commission and high interest rate).
Credit card or loan – which option should you choose?
Regardless of the fact that having a credit card may seem like a tempting option, ultimately all arguments are in favor of the cash loan. Thanks to this form of financing, you are able to get full control over your expenses. Moreover, the development of mobile banking made it possible for you to receive the necessary funds on your account even on the same day and without leaving your house.