Why choose a personal loan instead of a credit card?
At Fair Go Finance we firmly believe that whenever you’re looking for some extra funds a personal loan is a far better choice over a credit card. Why? Here are 5 convincing reasons.
1. Personal loans have an end date but credit cards can keep going
A credit card debt can potentially stay with you for years and years, ultimately costing you hundreds if not thousands of dollars in interest and fees.
On top of this, for those people who struggle to budget, changing credit card repayment amounts can be hard to manage and can get out of control.
In comparison, with a fixed rate personal loan you repay the same amount each time, making it easier to budget for. You also can rest assured that it will be fully repaid and closed after a set time period.
2. Credit cards are confusing
A credit card has a lot of terms and conditions that you really need to understand. Statement date, statement period, statement due date, credit limit, available balance, payment due date, purchase interest rate, balance transfer interest rate, cash advance, interest free period – and if you’re not clear on them, costs can suddenly escalate.
The idea of “interest free” periods may sound simple enough but many get caught when the full monthly payment amount can’t be made.
And that’s when the interest is charged on top of interest, and the costs continue to climb.
Personal loans are far simpler to understand and consequently manage.
They have a set repayment amount to make each month, and you certainly can’t keep spending on it, like you can on a credit card.
3. A Fair Go Finance personal loan provides great benefits and can help actively improve your credit score
At Fair Go Finance, if you keep timely payments on your personal loan, you will benefit in many ways.
Firstly, you will be eligible for our Mates Rates Loyalty Rewards Program – so whenever you return for a loan, you can be rewarded with lower interest rates and discounts on your application fee.
Secondly, our rates are personalised. Unlike credit cards which generally have one rate for everyone, we consider your credit profile and can reward you with even lower rates if you have a decent credit score.
There’s a lot of work required if your credit card is ever stolen.
There’s contacting the bank, cancelling accounts, re-organising direct debits and re-establishing payment arrangements.
Opting for a personal loan not only keeps you on track with regular payments, but it’s impossible to be stolen.
5. Credit cards can get out of hand – watch out for cash advances
Because credit cards are easy to tap or swipe, people can easily pile extra purchases or cash advances onto their card.
By deciding to take “cash” out of your credit card (a cash advance) you not only pay interest on it straight away but you also may get charged a fee for the privilege. Suddenly, the interest and fees can start mounting up and before you know it, even the minimum balance can become hard to pay.
If your credit card repayments aren’t met, your credit report will then be updated by your credit card provider indicating you’ve not paid it on time, ultimately giving you “bad credit“.
Personal loans are designed so a lump sum payment is made into your bank account, and from that point on, you can’t access any more funds.
As you can see, there are a lot of reasons why a personal loan is a better choice over a credit card facility.