• Home
  • Get a loan
  • Investing
  • How it works
  • About us
  • Blog
    • Peer to Peer Lending
    • Money Smarts
    • Debt
    • Savings
    • Financial Tips
    • Loans
    • Personal
    • Credit
    • Score
    • P2P Lending Buzz
  • Help
Peerform | Peer to Peer Lending Blog
Financial Tips, Money Smarts, Peer to Peer Lending

A Personal Loan vs. Your Credit Card

By Dvorah Rut · On February 23, 2017


The need for a loan can be unexpected, or merely a result of a planned expense that costs more than you thought, and for which your savings fell short. It is not a reason to worry or feel badly about yourself. Even with the most well-thought-out budget and careful planning we can find ourselves in need of cash. At these moments, it is easy and tempting to turn to our credit cards to make up the shortfall. It’s fast and painless, or at least it appears that way. But using your credit card for those unexpected expenses, or even to consolidate debt, could end up costing you much more than the initial outlay.  It is much better to seek out a personal loan.

However, let’s say you are not a stellar candidate for a bank loan, what do you do? You apply for a peer to peer loan, a platform tailor made for the majority of consumers who either do not want to deal with banks or do not meet the strict criteria for eligibility employed by bank loan officers. Marketplace lending, or P2P loans, are the hottest financing vehicle in the marketplace today, and for good reason. They open the door to millions of consumers who need access to much needed cash, quickly, easily and in a way that helps them come out of debt and improve their financial health. The goal of peer to peer lending is to help, not penalize.

Let’s look at 5 examples of when a personal loan is much better than tapping your credit cards.

  1. Your Wedding

According to The Knot 2016 survey the average wedding today costs a little more than $35,000. Naturally, prices depend upon where you live. This does not include the honeymoon. Maybe you have been saving up for your special day, but it is fast approaching and some of your vendors are looking for an upfront payment. You don’t have the money. You can charge those expenses, but the interest rate will cause the debt to mushroom way beyond the actual costs of your wedding. Plus if you max out your credit cards, and then you want to apply for financing for, let’s say a home or car, you will face difficulties. A personal loan from a marketplace lender such as Peerform gives you the flexibility of choosing a loan amount that fits your budget. Repayment on the loan is done through automatic installments deducted from your bank account, no need to come home from the honeymoon to a pile of bills, and your financing terms will be much better than your credit cards.

  1. Home Improvement

Your home improvement projects may appear to be perfect candidates for charging to your credit card, especially with the many in-store credit cards that offer cash-back and other incentives. However, these offers tend to be seasonal and come with a much higher interest rate. Some stores offer deferred interest rate on their in-store cards, but once the interest-free period is over, the APR can be very high. A personal loan, for the amount you need, at a modest interest rate, is much preferable. You can apply for a peer to peer loan online. You will have the answer and the cash you need quickly so you can go ahead and start knocking down walls.

  1. Uncovered Medical Procedures

Many medical procedures that are critically important to your overall well-being are not covered, or are minimally covered by your health insurance package because they are classified as “elective.” Elective procedures include: laser vision correction, hip or knee replacement surgery, fertility treatments, cosmetic surgery, dental implants and others. But there are additional medical costs that you might also find yourself facing alone, such as a trip to the emergency room or treatment from a specialist outside the network. Here is another situation where, for expediency sake, you might be tempted to use your credit card. But, unless you are able to pay the bill in full when it arrives, you will find your medical expense chasing you around much longer than you want. If you are using your credit card for other things, the combination of it all could throw you into serious credit card debt. A personal loan from a peer to peer lender is the better way to go.

  1. Moving out of Town

There are many reasons why you might find yourself facing a long-distance move—better career opportunities, better schools, better environment, a great graduate program—the reasons are endless. Unless your company is paying for the move, you are going to find yourself with considerable expenses. The moving company is only a part. There are all of your expenses on the road, disconnection and connection fees, insurance, deposits and more. All of these can easily be paid by your credit card, but who wants to start life in a new place with credit card debt? A personal loan for relocation expenses will help you meet all of your financial obligations on time, to be repaid in a reasonable period of time, keeping your credit healthy and freeing up your mind to think about more important things.

  1. Debt Consolidation

When your credit card debt is spiraling out of control, an attractive option seems to be to apply for a balance transfer card, especially with the 0% introductory rate. This is only a good option if you absolutely can repay the bill by the end of the introductory period. After the free interest period is over, the interest can be considerable and you will have accomplished very little in terms of reducing your debt and relieving your stress. Peer to peer lenders offer personal loans, especially to consumer who do not have “excellent” credit as defined by traditional lending institutions. A personal debt consolidation loan comes with competitive interest rates, no hidden fees, an easy repayment plan, and at the end, your credit score will improve.

 

What do you think?

comments

marketplace lendingp2p loanspeer to peer lendingPersonal loan

Dvorah Rut

You Might Also Like

  • saving money on your car purchase Financial Tips

    Secrets to Saving Money on Your Car Purchase

  • rebuild your credit Credit

    How to Rebuild Your Credit After Bankruptcy?

  • stay committed to your retirement savings Financial Tips

    How to Stay Committed to Your Retirement Savings

Sign Up for the Latest News

Join the Peerform community and stay abreast of career tips, workplace trends, fintech, money advice and more

@peerform on Twitter

  • Tweet Avatar
    Getting out of #debt is still your top financial priority. https://t.co/6nw1dCsRSK https://t.co/uGajHg7XlH

    10 months ago
    1 retweet 1 Favorite
  • Tweet Avatar
    7 Secrets to #saving #money on your car purchase. https://t.co/EDv2yO2V0e https://t.co/iOgoxtglUu

    10 months ago
    1 Favorite
  • Tweet Avatar
    3 ways to build #credit without taking out a #creditcard. https://t.co/EMj1Pwt0AM https://t.co/koVnMLvL4l

    10 months ago

Find us on Facebook

RSS Peerform Online Lending

  • Secrets to Saving Money on Your Car Purchase March 19, 2020
    Saving money should be one of your constant priorities. This is why you’re budgeting, tracking your money and checking your credit report. A car purchase can be a drain on your budget, especially if you weren’t able to save for it. So, you need some strategies for saving money on your car purchase. 7 Secrets […]
  • Hetty Green: “Witch of Wall Street” March 12, 2020
    Hetty Green was the richest woman in America during her era. Possessing a keen eye for potential market fluctuations and an innate sense of timing, she was able to turn a modest inheritance into a fortune. Green was ahead of her time. Her profound intelligence in money matters and commitment to financial independence was not […]
  • How to Rebuild Your Credit After Bankruptcy? March 5, 2020
    You had to file for bankruptcy. Your credit score has tanked. What do you do now to rebuild your credit? Roughly 752,000 cases of personal bankruptcy were filed in 2019 (Statistica.com). This is a vast improvement over 2010, when almost 1.6 million bankruptcies were filed. If you had to file bankruptcy, you are not alone. […]
  • How to Stay Committed to Your Retirement Savings February 27, 2020
    It’s easy to set up a 401(k) or IRA. Yet, more than half of Americans say they are not where they should be in their retirement savings. (Bankrate 2019 financial security survey) And 38% of the people surveyed said they don’t have a retirement savings account at all. How can you stay committed to your […]
  • Top 10 Money Tips from the Financial Experts February 20, 2020
    It’s always great to have money tips from the experts to help us meet our financial objectives. According to all the surveys, improving our financial lives was the second most popular New Year’s resolution for Americans in 2020. Taking first place was getting in shape. And, as we’ve reported before, most resolutions are already forgotten […]

© 2014 Peerform. All rights reserved.

Privacy Policy