Currently, in the Spanish society, every time a person has an economic hurry he decides to use a credit card or request a quick credit to be able to face different situations. From the payment of monthly bills, incidentals or last minute emergencies, trips or special occasions and etc. But it would not hurt to know the advantages and disadvantages of the credits and the cards to know which is the best option according to your financial needs.
In many cases, when we decide to finance a purchase we do not know whether to use the credit card or request a personal loan to get out of the economic trouble. It is not complicated to find yourself in a situation in which we do not have economic cash available at any given time. Therefore, it is good to have the opportunity to obtain instant financing without having to spend part of our personal savings if we have them.
To get rid of doubts, we will now analyze how each of the options described above works, so, in case of emergency, you will know if it is better for you to resort to a personal loan or, on the contrary, to use your personal credit card.
How credit cards work
If you have a personal bank account with one of the big banks such as Santander, BBVA or la Caixa, you will surely have a card from the financial institution with which you can finance some purchases. That is, credit cards are mini deposits that you have with the bank. Each card is assigned a maximum amount of money you can spend, without having it in your account. During a period of time, which is usually one month in Spain, the transactions you have made with this card are accumulated and the charge is made to the bank account associated with the card.
Therefore, you must have the money in your personal bank account for when the financial institution decides to take charge, normally in the period of time stipulated. Otherwise, you could receive a serious interest on your bank account derived from the non-payment on time. This rate is known as APR (annual equivalent rate), it is usually variable from one entity to another and can range from a minimum of 7% to a maximum of 50%, although it is normal to pay a 19% APR with this type of cards. of credit. Some cards may charge you a minimum monthly expense rate also for maintenance and even charge directly for the service without establishing the type of monthly expense you must make. Therefore, you should see and consult the contracting conditions with your financial institution.
How personal loans work
Personal loans are requested, for example, to finance studies, buy a car, take a trip etc. Although it is not the same as a mortgage, a personal loan of money consists in asking the bank or a financial institution for an amount of money and a return time is set with interest derived from the process. From this, the monthly fee is determined with which the capital loaned by the financial entity will be returned.
As a general rule, each financial institution can decide the interest rate and other additional expenses with which they will grant you the personal loan. If you want to pay less interest it is best to always return the loan in the shortest possible time. It is also very important to consider the conditions established by each financial institution, since the penalties for non-payment may vary from one to the other. For example, imagine that you have applied for a personal loan to pay your children’s college fees and you want to take away the loan with the money received at your next salary. You should see if your general conditions have penalty for amortization or however you can take away the loan in a single payment by not having this type of clause in your loan agreement.
Cards or personal loans.
If you do not know which option to choose at a certain time, we recommend you always evaluate your personal needs first and read each detail of the option you want to select. In any case, it is always good to have a personal savings system and to always keep monthly expenses under control. If you are going through a complicated stage perhaps the best is to opt for a personal loan, since you can balance your personal finances at the moment and successfully face a personal savings plan. That is, before requesting any external form of financing, whichever option you choose, it is better to know your capacity of personal indebtedness, since this way you will be able to negotiate with the financial institution better conditions.