At times, if you borrow from a friend/relative and owe him/her the specified amount, it ultimately equates to a debt. Over the course of time, those debts pile up, and you need time to repay them, and you don’t have the required liquidity available with you. For these unfortunate times, Personal loans come for your rescue.’
Balance Transfers is when you repay the existing debt with a Credit Card. It can be another great alternative if you want to keep your costs low. An added benefit that comes along with Balance Transfers is that you can avail of a Balance Transfer Card and receive it quickly in a shorter period.
Suppose you have different kinds of debts (Bank Loans, Bank Overdrafts, Benefit Overpayments, Catalogue Debts, Council Tax Arrears, Credit and Store Cards) to combine into a loan. In that case, Personal Loans are a better choice to make.
Comparison between personal Loans and Balance transfer
Talking about the benefits of the two, you will be able to make a more straightforward choice.
Through Personal Loans, you are allowed to consolidate debt which is not through a Credit card. With something called – ‘Credit Card Balance Transfer,’ you can consolidate the debt on the Credit Card because you can quickly repay the money from one Credit Card to another.
But, if you have medical debts, then it becomes impossible to compensate for the same through Credit Cards. In this case, if you have a Personal Loan, the lender gives you a cheque / a deposit of the amount borrowed into your account.
Personal Loans give you additional time and space to become debt-free. When you have a debt, your ultimate wish is to repay them at the earliest. Helping with the same, Credit Card Balance Transfers can lower the Rates of Interest for the debts, but only for a temporary period.
If you have an excellent Balance Transfer Card, the bank will grant you a 0% promotional rate. However, the top-up period that the bank provides is only 15 months. This means, if you plan on repaying your debt through a card transfer, you will have only that limited period to repay the debt. On the contrary, Personal Loans are designed for a more extended period. Their tenure is set for 3-6 years, giving you an ample amount of time to repay the loan.
Personal Loans provide reliability with regard to payoff time and costs. Opting for Balance Transfers can be less beneficial since it is only for a limited period. Still, Personal Loans give you the guarantee and a specific period within which you will know the payoff date and costs. This consolidation period given in a personal loan can be paid off better than going in for Balance Transfers.
The mirror opposite of Personal Loans is Balance Transfers. These transfers cost you less, in comparison to Personal Loans. Balance Transfers may cost less, but they will not charge interest for the upcoming months if you have an excellent Balance Transfer Card. On the other hand, you will pay a significant interest rate for Personal Loans, which will add to the cost.
Balance Transfer Cards can be easier to apply. Those who go in for Credit Cards make the application process easier, based on the customer’s preference. Personal Loans, on the contrary, have a tedious and prolonged application process, for which you need to provide financial information, which can be a hassle.
Now that we have drawn a clear picture of how to consolidate and repay your debts, you can make your choices as per your preferences. All that is required to know is the amount of debt you owe to an institution/individual; you need to know the repayment method and the type of debt it is. If you have a reasonable credit rate, you can qualify for a Personal Loan at a lower rate without worrying about your 0% Balance Transfer. It is a likable option for you to choose a Personal Loan over anything else.