Youngsters in their 20s who are fresh out of college and working in jobs that they were studying for all their lives, often find themselves in a peculiar situation. They want to invest or buy something big, a thing that they always thought they would buy after they began their first job. It may be a bike for them or a holiday trip for their parents, an expensive mobile for their brother or sister or anything else. Now that these youngsters have a stable income, they want to figure out if they should go for a personal loan or get a credit card. These options muddle them and they seek advice. For starters, youngsters should know the difference between a personal loan and credit card.
Fees and Costs
Between personal loans and credit cards, there are a number of fees and upfront costs that should be weighed in to get the best value. Where most personal loans charge an application fee, it is easy to find credit card options that don’t, but this doesn’t necessarily mean better value in the long run.
Big Spending vs. Small Spending
Credit cards have something called ‘revolving credit’; this means that you’re given a spending limit and you can easily spend up to that amount given that you repay the debt along with a small interest rate. Credit cards are useful for small purchases.
Personal loans, on the other hand, are great for big purchases; they act as a line of credit that is paid back during regular intervals in a fixed period of time. You can apply for a personal loan to borrow large amounts from the desired lender, but do check the rate of interest on the personal loan as it varies from bank-to-bank.
Check for eligibility
After arriving at a decision, do check for eligibility. If you’ve decided to apply for a credit card then thoroughly check the terms and conditions. There are several credit cards available and each has their own set of benefits. Also you will need to match the credit card eligibility criteria in order to get your desired card. The same goes for Personal loans.