The 3 Situations When You Should Replace Credit Cards For Personal Loans
We live in a money culture where we constantly depend on our credit cards to meet the bills and expenses; however, there are certain situations when it is better to take out a personal loan and ditch the credit card. Below are three scenarios in which you should consider replacing your credit card for a personal loan:
Large expenses
Credit card interest rates usually exceed 15%, so when you’re faced with a major expense it’s better to pay it off with a personal loan. Whether you’re planning to remodel your home or finance a wedding, it is better to pursue a personal loan so you won’t be piling large interest rates over time. While personal loan rates also depend on the individual’s credit history, those who have a good score and record can easily obtain a personal loan for lower interest rate.
Emergencies
In case of emergency, do not turn to your credit card – weigh all of your options before making any payment. While some people have their own emergency funds, many do not have that kind saving set aside and end up using their credit card immediately when faced with an unexpected challenge. This can range from accidents to late payments. If you encounter yourself in these types of situations, consider taking out a personal loan to cover the costs before reaching out to your card. While credit cards can ameliorate the situation immediately, you’ll be paying so much more in the long run.
Credit card debt
For people looking into alleviating their credit card debt, personal loans may be one of the alternatives. A lot of people try using other credit cards to consolidate their debts, which only exacerbates their financial situations since they end up replacing their current debt with another similar card debt. For those who have a good credit history and score, it’s better to obtain personal loans for lower rate to alleviate debts and interest costs. However, this is not recommended for people who have a bad score since the interest offered along with the personal loan can be as high as or even higher than the money owed.
If you find yourself facing a dilemma that involves large debts and expenses, try obtaining a personal loan. As long as you have a good score record, personal loans will provide the time and rates needed to recover from the financial drawback.
Sources
http://www.csmonitor.com/Business/Saving-Money/2016/0902/Five-times-you-shouldn-t-use-a-credit-card
https://smartasset.com/personal-loans/when-to-pay-off-credit-card-debt-with-a-personal-loan