If you have a credit card and if you know of a reliable online money supplier who provides online personal loans, then you should understand when to use each of these borrowing options.
Let’s take a closer look at some specific situations.
If you have to make a large purchase…
An online personal loan is usually a better option for a larger planned purchase or an unexpected expense such as a major repair. This is because you can get an online personal loan for the exact amount that you need, and you can manage the repayment in installments. This is much easier than managing credit card debt.
If you have a low credit score…
Online money suppliers do not always look at your credit history. Instead, they look at your pay stub and bank account statements. If you have a low credit score, you may not have a credit card, or you may have a card with a high-interest rate. If you have a low credit score, online personal loans are almost always the best option.
If you need to improve your credit score…
Credit cards, especially secured credit cards, can help you increase your credit score. However, they are only effective at doing this in particular cases. To improve your credit score, you have to use your card regularly, but you should not build debt when you do so. This means that you should make small purchases with your credit card and pay off the balance quickly. If you can do this, you may increase your credit score over time.
If you want to make secure purchases online…
Credit card companies generally have excellent fraud protection. This means that you can make purchases online and have the credit card company on your side if your card information is stolen or if the product you bought was faulty in some way and the vendor did not accept a return. Again, if you make purchases online, you should pay off the credit card balance quickly so that you do not incur any interest charges or build debt.
If you need cash quickly…
If you need cash, an online personal loan is almost always better. Cash advances from credit cards come with high fees and high-interest rates. The online personal loan process is quick so that you can get your cash in a matter of hours, and the payback is generally more manageable than a credit card cash advance.