Consumer credit? Credit card? There are two main and most popular types of credit in the form of consumer credit and credit card. Both types of loans help borrowers get what they have long planned or dreamed of. To avoid the dilemma, it is important to know the difference between consumer credit and credit card use.
Consumer Credit? Credit Card?
Each of these types of loans has individual characteristics and preferences. The main factors that differ from each other are urgent access to cash, interest rates, applicable maturities, availability of additional Bank charges, limits and some other factors.
Advantages and Disadvantages of a Credit Card
When you think about using a credit card, knowing all its advantages and disadvantages, you can get the full benefit of using it. Credit card holders who have an urgent need for cash have the opportunity to use a credit card without wasting time on loan processing. Banks offer credit card options with maturities from 5 to 12 months. In addition, the credit card provides holders with ease of use.
Any transactions on the card can be carried out through ATMs, Internet banking or mobile applications. Despite the fact that credit cards have floating interest rates, their size is most often determined from 1.49 to 1.84% per month. It should be borne in mind that the amount that the holder can use is within the limit defined by the Bank loan agreement. However, no written contracts or confirmations are required for each transaction.
It should be noted that interest rates on credit cards are significantly higher than interest rates on consumer loans. Credit cards that provide the convenience of daily use are a type of loan that offers you a 30-day interest-free loan, provided that loan payments are made on time.
Advantages and Disadvantages of Consumer Credit
After carefully assessing the advantages or disadvantages of a consumer loan, you should decide whether it suits you or not. As a rule, banks offering consumer loans set the loan period from 3 to 48 months.
The terms of the loan may vary depending on the interest rates, maturity, credit rating of the applicant and the amount of the loan requested. Persons wishing to obtain a loan can apply at a Bank branch or via the Internet. It should also be kept in mind that having a loan application does not mean that you can get a loan. Banks have the right to approve or deny loan applications.
After receiving your loan application, the Bank requests information about your credit history in the database of the Credit Bureau. Based on the credit report received and your credit rating, the Bank decides whether to refuse or approve your loan application. Also, based on your credit rating, the Bank determines the future limits of your credit. In consumer loans, banks are allowed to use credit rates from 1.09%.
In case of approval of your loan application, you will need to collect a list of some documents: identity card, pension certificate, your financial status, information about salary and position, financial guarantees, etc. It should be borne in mind that some banks also require additional costs, such as case management fees and life insurance.
Based on the above, it can be concluded that the type of loan should be chosen based on the individual needs of the borrower. If a person has an urgent need for funds, a credit card with a maturity of up to 12 months will be ideal. For those who are planning larger purchases, it makes sense to get a consumer loan with long-term repayment, but lower interest rates than on the card.
You can find all the questions you are interested in regarding the conditions of consumer credit, offers from banks, the most suitable credit conditions, requirements for consumer credit repair, requirements for credit, credit report and credit rating.