Credit cards and online loans both are the main short term loan option for people who are short on cash and need to borrow money till they get their next paycheck. Credit cards have been around for decades and in countries where they are embraced people use them for almost all everyday purchases starting from buying clothes to paying rent and entertaining themselves. But in places where credit cards are not that popular these short term lenders have stepped in and started to gain a widespread popularity. People use online loans similarly to credit cards because they get money right into their bank account and can do online purchases or take that money out and do some offline purchases as well. But there are also some major differences between these two loan types and in some cases one is better than the other.
Credit-cards
Credit cards were first introduced in the mid 1900 and started off as a way how wealthy individual could spend their money that they had stored in various banks. But over the years credit cards have become more and more popular as well as widely available to consumers. Credit card industry consists of more than 5 trillion dollars worldwide and that is a staggering number considering that the World Gross domestic product is just a little bit bigger than 100 trillion dollars. To get a credit card you have to first go to a bank and get approved by a bank employee but that can take some considerable amount of time so if you need to get a loan quickly and don’t have a credit card then this can be a big issue. When you are approved for a card then you will have to pay a monthly payment to use this card as well as interest on all your card loans that you will use. Usually credit cards have a pre-determined limit of how much you can borrow and within that limit you can use as much payments as you like as well as take out cash for offline payments. But for most cards if you take out cash from an ATM you will have to pay a fixed price from 1% to 3% and that can be a bit expensive. Credit cards are usually made for people that tend to borrow not just once but do it multiple times a year and if you fit this description then a credit card may be the best choice for you.
*რეკლამა
Online loans
Online short term loans are the newcomer to the loan industry and they usually are small time loans that you can get within a couple of minutes by registering at a non-bank lenders website. These loans usually have higher percentage rates than credit cards and that is because there is very little oversight and these loans can also be issued to people with bad credit history. Online loans are made for short term expenses that can include emergency situations as well as unexpected expenses but you have to repay them in a period from 30 days to 3 months depending on the lender and their terms and conditions.
When the money is in your bank account you can basically do with it anything you want and it does not matter if you take it out as cash or buy online payments as you won’t need to pay any extra interest or penalties. These loans are usually very convenient but their best attribute is the speed of which you can acquire them as you only need about 10 to 15 minutes to get that money in your pocket.
I hope this introduction to credit cards and online loan types will give you a general overview about these loan types and when to use one or the other.
