If you’re looking to consolidate high-interest debts, there is certainly a way: instant loans. But where do your high-interest debts originate from? Are credit cards the only source for high-interest debts? But aren’t credit cards an extremely popular credit product? They certainly are, but are they better than instant personal loans?
When you apply for any credit product, approval is likely to depend on your credit score and repayment history, and your sanctioned loan amount and interest rate are also going to depend on those parameters. But what type of debt are you looking to consolidate here? If it is credit card debt, well, instant loans are a brilliant solution. But credit cards are impressive products too – they come with interest-free periods, and also make life easier. So how do these different credit products compare? Which one among the two is worth the shot? Let’s find out!
When Are Credit Cards a Good Option?
Credit cards can be a great option in either of the situations:
- When you’re looking to finance a small expense.
- When you’re capable of paying off your entire balance every month.
- When you qualify for a promotional interest offer.
While they do seem convenient, credit cards can be pretty expensive if you don’t manage to settle your debts every month. Things are equally bad if you don’t have any promotional offer for 0% interest. In almost every case, these cards carry double-digit rates, and when you carry high debts every month, your credit score is likely to be negatively affected.
In the simplest terms your credit card is a mode of revolving credit that lets you repeatedly access the funds you need. So instead of lump-sum amount of cash, your card comes with a certain credit limit. The minimum repayments for every month are usually about 2% of your outstanding dues. While you can always avoid this by settling the entire bill at once, things get really difficult if these bills are on the higher side.
Owing to their higher interest rates and subsequent risks, credit cards are more suitable for short-term financing options, or for purchases that you can clear in full. So, if it’s your daily expenses or monthly bill, credit cards can surely work in your favor.
When are Instant Loans a Good Option?
Instant Cash Loans can be a great option in either of the situations:
- When you’re looking to consolidate your high-interest debts.
- When you plan on financing a big expense.
- When you’re capable of paying monthly installments over the long run.
The interest rates against personal loans are relatively lower than credit cards and their borrowing limit too is on the higher side. And the best part: unlike credit cards that determine your borrowing potential according to your monthly income, instant personal loans are available to individuals with a minimum income of INR 20,000.
What’s more, unlike credit cards, personal loans do not limit your expenses in any way. While you can only use credit cards to buy items from merchants who accept it, personal loans can be used for making any purchase of your preference.
Since the repayment tenures too are pretty flexible, you have complete freedom in choosing an EMI according to your monthly salary and additional expenses.
But since the rate you receive on your private personal loan is decided according to your credit score, it is always better to pull up your score before you apply for this financing option in the first place.