Credit Cards versus Instant Cash Loans

With the high rates of inflation, people today are often living end to end, with a very small percentage of their money headed into savings. In such scenarios, it is impossible not to rely on credit cards or loans to pull through the month. Even for regular expenditures including food and weekly entertainment, millennial’s have now started relying on credit. The concepts of instant cash loans and instant online personal loans are also gaining popularity and are looked at as means to pay off your expenses and keep them under check.

Young employees and fresh graduates are often faced with a dilemma while borrowing: Credit cards or Cash Loans. While both have their own benefits and you cannot go entirely wrong with either, it is important to know which option is better suited to your situation.

#1 Limit of Borrowing and Rate of Interest

The quantum of money you require often determines whether you should go for a credit card or a cash loan. If the quantum isn’t too much every month, it may be better to go for a credit card. Regular borrowing and paying off credit will assist in improving your credit score as well – a prerequisite for most bank loans. However, if you wish to use a large amount of money (not necessarily every month) for non-regular use, such as buying a new mobile phone, or paying your daughter’s annual tuition fee, an instant cash loan is the obvious choice. They offer low rates of interest and thanks to digitization, instant cash loans are now more easily available without the hassle of rigorous paperwork and the strenuous wait period. EarlySalary, for instance, allows you to apply for a cash loan through their app with a confirmation within 8 to 24 hours.

Banks charge an exorbitant interest on credit card usage

#2 Time taken to pay off debt

Credit cards have a relatively high rate of interest, and while they are simple and easy for small expenditures, you must make sure you pay off the debt in time. A recurring rate of interest could almost double your debt if not paid off in time. Gauge the time you would require to pay off the debt – if the time frame is more than 3 months, instant cash loans will save you money. Most instant cash loans allow you to pay back the money within a 6 to 12 month period with a nominal interest charge. On most instant loan apps, the repayment policy is flexible and allows you to decide the payment schedule depending on your convenience.

#3 Spending habits

Credit cards have lucrative entertainment deals associated with them, however, if you tend to overspend and have trouble resisting temptations, these deals could be your downfall. A little control could go a long way when it comes to using credit cards, however, it would also be unfair to dismiss the benefits that come with them, such as accumulation of miles during flight travel, lounge access and cash-backs on most purchases. Hence for calculated spenders, a credit card could be extremely useful, not just for your cash shortages, but in your daily life in order to redeem and receive rewards.

#4 Credit score

A lot of earning folks are unaware of what a credit score is and how it is important for your finance. In traditional banks, your credit score is almost always the only thing standing between you and your loan. Any kind of traditional loan requires you to have a credit score and a higher credit score reduces the interest levied on your sanctioned loan. While most young employees become non-eligible for loans due to their poor credit score, instant loan apps are addressing this problem by evaluating customers based on a combination of their credit score and social worth score. Your social worth score depends on your social media presence and whether you know/are interactive with people who have previously defaulted their loans. In any case, it would be juvenile to ignore your credit score. Your credit score, whether bad or non-existent, can always be improved by borrowing and subsequently paying off credit frequently.

Percentage indicates fraction of new loans sanctioned
While it is evident that different kinds of people would be able to handle the two kinds of debts differently, credit cards have always been associated with more risk and interest payment, and hence most borrowers, independent of age and occupation, tend to prefer cash loans. Instant loan apps in India have made it easier to apply for instant cash loans if you have a monthly salary. Over the past few months, the hassle-free and speedy procedure of applying for loans has secured a lot of happy and trusting users for EarlySalary.

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