The Dentition - Affinity Bank Dental Newsletter

Credit Card Vs. Personal Loans Credit Cards vs. Personal Loans It's the new year – just following the holiday season which was a time for family, fun and lots of presents. And for many Americans, it was also a time for major spending, leaving them with big credit card bills come New Year's. But what's a person to do when there's a big expense coming up and no savings to cover it? Ideally, you'd delay the expenditure until you had the cash. But who was going to tell your kids that Santa needed them to wait until Easter? It's no wonder that many of us opted to whip out the plastic. However, aer asking the right questions, you might find a personal loan is a better option for future big spending. How much time do you have? Credit cards are handy for unplanned expenses, such as last-minute gis or emergency car repairs. But if you know you'll need extra cash, a per- sonal loan may be the better choice. e personal-loan process is relatively simple. Everything from application to approval can be completed from the comfort of your couch at a regional institution like Affinity Bank. What's your credit score? If you have an excellent credit score, between 720 and 850, you'll most likely be able to get a good interest rate on a personal loan. e lower your score, the worse the terms on a loan will be, and you may need a co-signer or property to use as collateral. What's your credit card interest rate? Personal loans usually have a lower interest rate than your average credit card, especially if you have stellar credit, but if you're eligible for a zero- interest card, this may be the time to get it. Just bear in mind that if you're consolidating other credit card debt, even no-interest cards will charge you a balance-transfer fee, which typically runs about 3% of the total you're transferring. How much money do you need? With few exceptions, credit cards have relatively low limits, whereas personal loans can range, on average, from $500 all the way up to $50,000. So if you're in the market to pay a fairly large bill – like covering a major medical expense or even adopting a child – a personal loan is probably the better choice. How long will you need to carry this debt? Personal loans come in handy when you're looking to finance for the long term – for instance, if you're consolidating a large amount of debt over a year or more. e loans come with a fixed term and an interest rate that doesn't fluctuate over the course of the loan. If you take out a five-year loan, it's done in five years, whereas if you pay the minimum on a credit card every month, you could be paying it off for 20 years, or more, depending on how much you owe. So if you are reasonably sure you can pay off the balance within a month, or even six months, putting it on plastic may be the easier way to go. Anything more than that, then a personal loan could be your better option. Judy McGuire, NerdWallet © Copyright 2015 NerdWallet, Inc. All Rights Reserved

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