The world of credit cards continues to grow on a daily basis. When asking around you will find out that almost everyone has at least one credit card and it is not uncommon to find people who have ten or even more credit cards that they carry around with him or her on a daily basis.
The frightening thing is that those people who have a large amount of credit cards typically have very high balances as well. The debt does not stop there either. These borrowers are also found to have at least one personal loan as well. It is easy to get into debt however it is not as easy to get out of the debt.
Credit Cards Vs. Personal Loans
When trying to decide what the best financial move is for you it can be difficult when trying to make the comparisons between credit cards and a personal loan with a fixed interest rate. It is best to make the best financial decision so you will want to lay it out all on the line when making your decision. This article will help to assist you in comparing the difference between the average credit card and a personal loan with a fixed interest rate.
Interest Rates
The first item will most likely wish to compare is the interest rate between a credit card and a fixed rate personal loan. With the fixed rate personal loan you will have an interest rate that will not change over the life of the loan. This means that your payment will remain the same month after month until the loan is paid off. Also with a personal loan you will find that the interest rate will be much lower than that of a credit card. The interest rate on credit cards can be very high especially if you are a borrower who has a poor credit history and a low credit score.
Repayment Period
Another important item to compare between the two is the repayment period. When paying back a personal loan you will have a monthly payment that is required to pay your loan commitment back in full within a preset period of time. A credit card is just the opposite. The only amount that is set to be paid every month is a minimum payment. This amount will be different depending on the total balance outstanding. Of course when you are only paying the minimum payment is could take many years before your card is paid off and that is if you do not continue spending on it.
Annual Fees
A negative point to be made when speaking of a credit card is that several credit cards are only offered with an annual fee included. It will not matter if you use the card or if it sits with a zero balance on it. Every year you will be charged a fee. When compared to a personal loan you will find that a loan does not involve a fee of this type.
Conclusion
When comparing a credit card to a fixed rate personal loan you will find that there are more disadvantages to a credit card. These disadvantages will often cost you more money in the long run. It is important to read all of the fine print and select what is best for your financial situation.
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