When To Prefer Personal Loan Over Credit Card Debt
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The situations when you should prefer a personal loan over credit card debt, especially credit card EMIs.
Hello and welcome to FundooMoney, your 24X7 buddy for all your money matters. Credit cards provide you with great convenience of a loan at hand so that your daily life doesn’t get disturbed due to immediate cash requirements. But there are many times when you have an urgent financial requirement and should opt for a personal loan instead of using the credit card. We will discuss those situations in just a little while.
Here are some situations when it makes sense to opt for a personal loan instead of credit card debt.When expected repayment period is long
For a higher loan amount you need time to repay. In such circumstances, a credit card would typically be unable to provide you with such a loan. There are also credit cards which do not offer longer tenures for EMI options. In such situations, a personal loan with an affordable EMI is your best bet.
EMI option unavailable with credit card
When you have credit card that does not offer the EMI facility for the use you intend to make, personal loan becomes the default option, with the absence of any other lower cost loan option. If your intended use requires cash and your credit card does not offer a cash loan on EMI, go for a personal loan.
Credit card limit insufficient for EMI option
When the amount of money required by you is much greater than the available credit limit of your credit card, you will need to seek a personal loan.
High credit card EMI interest rate
The cost of the credit card EMI option is important. If the interest rate charged for the credit card EMI for desired tenure of the loan is much higher than that of personal loans, opt for the latter.
Zero or lower prepayment charges
If interest rate and processing fees are similar for both credit card EMI and personal loan but the personal loan provider offers you flexibility of prepayment without any penalty, opt for this personal loan. This will help you contain the overall cost of the loan in the terms of total interest paid.
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