Many of you would be confused between choosing a personal loan or a credit card. Well, both are the tools to gain credit but still there is a vast difference between the two. By knowing the difference one can figure out which would be the most suitable bet.
You can borrow bigger amounts with loans. Anything that lies in the range of £1000 to £25,000 is allowed.
With credit cards, you will be limited to a smaller borrowing amount of around £5000.
A loan is about lending money for a fixed duration of time. If the time period of repayment varies then interest is charged for it.
In this case, it is a revolving line of credit that can keep lending money until you use the card, only if you keep making repayments.
In case of secured loans, you get money against an asset.
With credit cards, you get money without putting any collateral.
There are no interest free periods in case of loans. You have to pay the interest without any gaps.
Most of the card providers, offer a 0% interest free period after which they charge interest. Max 0% interest period is three years.
The best sources for borrowing loans are banks, credit unions, crowdfunding websites etc.
There are various credit card providers that are aligned with banks to offer credits.
These are best suitable for long term debt and for borrowing higher amounts.
Cards are most suitable for short term debts that fall under the credit limit suggested by the provider. If you cross the credit limit then you need to pay a higher interest.
Weigh the differences and check which method of borrowing money is suitable for you. For more on loans and credit cards, just check our website freepricecompare.com or call us on 02034757476.