You could be disciplined in your spending and maybe you’ve been saving wisely, but life is full of uncertainties. You may find yourself thrown into a curveball and suddenly face expenses that you can’t handle even with your accumulated savings. What do you do? At this juncture, a credit facility is inevitable like cherrycash official website. The question now remains, what type of credit facility is the best for your situation?
As a Singaporean, you have a thousand options. You can make use of Singapore’s licensed money lenders such as money lender or bank. These financial institutions offer a variety of credit facilities although packaged differently. For emergencies, the most common facilities are Credit Card and Personal loans.
What is a Credit Card?
A Credit card is a payment card, issued by a financial institution to the borrower, to allow them borrow funds from a pre-approved limit to pay for purchases. The limit is set by the financial institution based on the borrower’s credit score. The borrower can swipe the card at a purchase point or use it for online transactions.
What is a Personal loan?
A personal loan is an unsecured loan that can be used to finance any unexpected expenditure. It is considered as the most appropriate type of loan to finance emergencies. If sourced from the best-licensed money lender in Singapore, the borrower may get a super deal in terms of interest and loan tenure.
Credit Card and Personal Loan Similarities:
– Both facilities are popular tools for funding emergencies
– They are both unsecured. This means one does not require a collateral to secure one
– They both charge interest rates
Differences Between Credit Card and Personal Loan
A credit card is typically good for a short term facility while a personal loan is ideal for a long term loan. Mostly for a credit card, balances are payable within 30 days of which delays attract penalties and interest. On the other hand, a Personal loan is spread into monthly installments and can be packaged into a term of 2 to 10 years.
Credit cards have the potential to charge high-interest rates as compared to personal loans. Additionally, they attract high-interest rates and penalties on delayed payments. Interest rates for credit cards are variable while interest rates for Personal loans are fixed.
Personal loan offers a higher limit as compared to Credit cards. This is because the repayments can be spread for a longer period as compared to a credit card. The highest limit for a personal loan can go up to $100,000 while a credit card can go up to $50,000.
For Personal loans, you get a single lump sum upon approval while for a credit card you get a revolving credit as well as cash advance. For a personal loan, you get only one disbursement while for a credit card the money is disbursed on a need basis as long as the card is in good credit standing.
The two facilities give an avenue to borrow, be it a daily loan or monthly loan Singapore. However, a credit card is considered more expensive as compared to a personal loan, though it’s the most ideal for online purchases and bill payments.