Personal Loans and Credit Cards both help when you need money. Read this article to understand the difference between the two and make a wise decision.
If you’re looking to do a little borrowing, you might be considering either a personal loan or credit card. But which financial product is best for you?
In this article, we’re going to be examining both personal loans and credit cards so you can make an informed decision on which one better suits your individual circumstances and personal finances.
Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56. Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.Maximise your options: Compare and apply for loans below with LoanTube
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Loan Amount
£4000 -
£20000
Norwich Trust
Loan Term
1 -
10 years
4.8/5
Representative APR
31.90%
Minimum Age
21 Years
4.8/5
Norwich Trust
Loan Amount
£4000 -
£20000
Loan Term
1 -
10 years
Representative APR
31.90%
Minimum Age
21 Years
Minimum Income
£2000 per month
Loan Amount
£5000 -
£100000
Evolution Money Loans
Loan Term
1 -
20 years
4.5/5
Representative APR
28.96%
Minimum Age
18 years
4.5/5
Evolution Money Loans
Loan Amount
£5000 -
£100000
Loan Term
1 -
20 years
Representative APR
28.96%
Minimum Age
18 years
Minimum Income
Not mentioned
Loan Amount
£1000 -
£10000
1Plus1 Guarantor Loans
Loan Term
1 -
5 years
4.4/5
Representative APR
39.90%
Minimum Age
18 years
4.4/5
1Plus1 Guarantor Loans
Loan Amount
£1000 -
£10000
Loan Term
1 -
5 years
Representative APR
39.90%
Minimum Age
18 years
Minimum Income
Not mentioned
Let’s start with credit cards.
Everyone seems to have a credit card, and they can come in handy for a little retail therapy, secure spending abroad or when you just need a little boost to your finances.
Credit cards are best utilised for short-term borrowing of low amounts as the interest rates can be higher than those you’d be paying on a personal loan. Many credit cards allow you to pay off a minimum amount each month or more if you’d like, so you can adjust the amount you repay dependant on how much money you have spare each month.
As long as the minimum amount is repaid, you are servicing the debt, but this will significantly increase the amount of interest you repay on the outstanding amount and the time it takes you to clear the balance, so make sure you pay it off as quickly as you possibly can.
Next, let’s take a look at personal loans.
If you need to borrow an amount in excess of £1,000, a personal loan might be a better option. Personal loans have variable interest rates. But many of them can still work out cheaper than using a credit card. Especially if you want to make a large purchase such as a car.
Personal loans offer higher levels of credit than a credit card. Therefore, they’re an ideal financial product for higher value purchases. They also differ from credit cards. You must pay an agreed amount each month for the term of the loan. And the balance will be cleared within a set amount of time. The tenure is normally between 12 to 48 months.
It is possible to pay your personal loan off early and make some savings on interest too. But some loans carry an early repayment fee to enable you to do this. So, it’s worth trying to find a personal loan product that doesn’t carry a fee if this is what you’re aiming to do.
