Credit cards and short-term personal loans are common topics in lending circles nowadays. These debt tools are popular choices among many borrowers because they can be used for various reasons. A credit card lets you draw ‘virtual cash’ and enjoy several privileges, but the penalty for non-repayment is often too high. A short-term personal loan, on the other hand, is very convenient and can be used for financial emergencies. If you want to choose between a credit card and a short-term loan, here are some factors that you have to know:

 

Application Process

 

It’s undeniable that short-term personal loan application is ten times easier than credit card processes. Short-term applications can usually be finished within a day, and you’ll get your money quickly. Credit cards, even though they’re frequently offered by persistent agents, may take a while before you can gain real benefits. Also, if your credit rating is not at par with the company’s measuring stick, your application will be denied. If you need money fast, personal loans are better options.

 

Requirements

 

For requirements, short-term loans win the round. Short-term loan lenders typically ask for IDs, government documents, income statements, and employment certificates. Other than those, nothing might follow. Credit card companies and banks will ask you for tons of requirements. They may require additional pictures and documents – on top of interviews. So, if you’re applying for credit cards, you need to be very patient.

 

Inherent Value

 

If you’re going to compare the value of short-term loans and credit cards, the latter will win by a margin. Credit cards are powerful debt instruments that can bring numerous advantages if used properly. You can even use a credit card to finance an investment or boost your credit score. Short-term personal loans are meant for short-term purposes only. Once you’ve paid off the loan, there will be no more benefits or advantages because the deal is complete. Don’t worry though – you can always reapply for a short-term personal loan if you’re a good payer. And you can even use your short-term personal loan for a side hustle or business idea.

 

While getting a credit card is not a bad thing, you should juggle your options properly. A credit card can bind you to a year-long agreement, while a short-term loan takes only few months. Even though these debt tools are different, they have one common truth: they must be repaid within the agreed time. Otherwise, you’ll face huge penalties.