Interest rate charged on personal loans is typically lower than that for the amount you pay when you revolve the outstanding balance amount of your credit card. Yet, a personal loan may not always be better than credit cards as a loan option. There are situations when you need to prefer a credit card over a personal loan. Here are four such situations.
When you need money urgently No matter how quick the personal loan processing is, it would take you at least a few days for you to get the loan. So, in case of an urgent requirement, like a medical emergency, you will need to fall back on your credit card.
When you have adequate limit You can only use your credit card instead of a personal loan when it has a higher credit limit and can provide enough money to address your emergency requirement. So, it is wise to keep an adequate spending limit on your credit cards so that you can use it in case of an emergency.
Convenient EMI conversion option If your credit card has a convenient EMI conversion option at a very competitive interest rate and processing fee, prefer it over a personal loan with a lengthy processing procedure.
We saw some of the situations in which using a credit card works out to be better than taking a personal loan. Credit cards may charge high interest rates on outstanding balance but credit card also offer benefits which can be useful in certain situations. When you are confident of making the repayments, a credit card has an edge over personal loans.