Personal loans vs. credit cards: which one should win? Of course, in extreme circumstances, this choice is not an easy one. It is very stressful to deal with these choices alone – so imagine if you threw an emergency in the mix. You have so many things to do: pay your debts, fix your car, fix your health or fix the air conditioner that seems to be blowing more heat than cool air. And what do all these things have in common? It’s simple: they are very expensive.

What Do We Do?

Ideally, we should all have an emergency fund set aside for these types of situation. Sadly, however, many people go with the belief “I’ll start saving next month because I’m OK now.” As a result, when catastrophe hits, we wish that we would have saved some cash.

So what should we do? Obviously, we can’t come up with this kind of money ourselves. Surveys showed that if they’re put in such circumstance, half the population would not be able to collect this money in such a short amount of time.

This brings us back to the personal loans vs. credit cards question. Which one should we use to pay off our emergency? Well, here are some ideas on both options.

  1. Limits

We use credit cards to cover daily purchases. The limit will stand somewhere in the thousands, and they can be used to cover small purchases such as some stuff you would need to fix your car. The advantage to credit cards is that the line is always renewed, so you don’t have to apply for money each time you need to pay for something.

Personal loans, on the other hand, have a larger limit than a credit card; therefore, if you need to cover significant expenses, this may prove to be the more convenient option. So what’s the winner of the personal loans vs. credit cards contest? This depends on the size of the calamity.

  1. Repayment

When we’re talking about payment in the personal loans vs. credit cards “competition”, you should know that this is done every month in both cases. The difference is that personal loans have a fixed amount that you have to pay, while credit cards are more flexible when it comes to the payment.

A credit card will require you to make minimum payments so that your credit doesn’t suffer. On the other hand, if you only go with the minimum, it will take ages to pay the debt. At least with a loan, you know exactly when the payment will be done. So personal loans vs. credit cards – it depends on how flexible you want your payments to be.

  1. Ease of Use

You can use credit cards at a merchant terminal. They’re fast and convenient, but unfortunately, they aren’t universal. If you have to pay a debt to a friend, it won’t be easy to do. Personal loans, on the other hand, will go directly into your account. You can withdraw as much as you want because technically, that money is yours.

Personal loans vs. credit cards will be pretty much an eternal fight. Long story short, if you want to pay off a bigger debt, go for a loan. If it’s a relatively small one, you may want to opt for credit cards.

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