Travelling is one of the most exciting things in life, especially if you are on vacation! However, knowing how much money you want to spend on your trip is crucial. While there are many ways to save money when travelling, some people prefer using credit cards as it gives them more flexibility and perks than personal loans do.
While we discuss this, we must know both sides of the story.
Personal loans come with low-interest rates compared to credit cards; if you miss a payment or pay late, your credit history can be affected. While on the other hand, credit cards are easier to use as they provide instant cash back and travel rewards points.
But suppose you have a better understanding of how to manage money properly. In that case, personal loans may be the best way forward for you if you want to travel comfortably without worrying much about money matters while doing so. However, choosing which will work out better for you depends entirely on your current financial situation and future travel plans!
Credit Card
Credit cards are popular for managing travel expenses.
Convenience: You don’t have to carry cash or worry about running out of money if you need more funds while travelling.
Reward points: Most credit cards offer rewards on purchases made with their cards, which can be redeemed as discounts or other perks later.
Interest rate: Credit cards have much higher interest rates than personal loans yet are shown as free money. However, interest rates are haunting as one moves beyond the billing date.
Personal Loan
Personal loan interest rates are much lower than credit cards. Personal loan interest rates start from 10% pa, whereas credit cards usually charge more than 40%, making personal loans a better travel option.
A personal loan takes less time to get sanctioned compared to availing of a new credit card. We recommend using a personal loan to travel rather than depending on a credit card.
How does a credit card work?
When you purchase goods with a credit card, that amount gets deducted from your credit limit when you make a payment.
The main difference between a credit card and a personal loan is that you can use the money you borrow on credit cards for shopping. At the same time, personal loans can also pay off existing debt using a personal loan balance transfer. So, a personal loan will be more helpful if you need to buy a new car or want to renovate your home.
On the other hand, while shopping online or making large purchases such as electronics and furniture without worrying about sufficient cash in your bank account right now, using a credit card is probably better.
However, both types of loans have pros and cons, depending on what suits your situation best!
It is essential to pay back the amount within the due date. Otherwise, banks charge a higher rate, a late payment, or interest. So, whenever you take care of your unpaid balance by paying it off in full, you will be set to use your credit card again. After you have paid off your credit card, you can continue to use it and make purchases.
When using a credit card for travel, most people mistake using it because they can save on interest. But remember, this is only possible when you pay off the due amount by the due date. Otherwise, even with the best travel rewards, you might pay more than enough for your trip.
A significant advantage of a personal loan is the lower interest rate as personal loans start from 10% pa while credit cards usually charge more than a 40% interest rate.
So if you’re late in paying your credit card, expect a hefty late payment fee!
On the other hand, if you cannot pay off all your dues on time, then using your credit card for travel can become costly because of the interest rates and charges that come with it.
A personal loan lets you spend from your account directly. One may use cash or debit cards. Users will be aware of the repayment to be done monthly without surprise.
A personal loan is taken from a lending agency like LoansJagat and repaid in monthly installments. One may use cash or debit cards to spend the amount directly from their account. It is important to note that these loans have low interest, and one can easily track their repayment process with the help of an online banking facility. No hidden charges are associated with this type of loan; hence, it is safe to use compared to credit cards, where one may incur hidden costs due to late payment or non-payment of dues.
A person who gets approved for this type of financing can get quick approval without undergoing any credit check as long as they have a good employment history on their resume.
Numerous cards are available in the market, giving you reward points on every purchase. All you need to do is be wise while choosing a credit card that offers attractive reward points as per your needs and requirement. Such cards offer reward points on fuel, hospitals and other things too. In addition, if you are someone who uses their credit card wisely and pays off their dues before time, you get an added benefit of not being charged any interest rate or penalty charges which eventually saves up big bucks.
Reward Points on Fuel, Hospitals and Other Things Too.
Conclusion on Personal Loan vs Credit Card for Travel
In conclusion, a personal loan is a better option for you. Credit cards have higher interest rates and fewer repayment options than personal loans, but if you pay off your dues before the due date, you might be able to get some extra rewards.
Personal loan interest rates are much lower than credit cards. Personal loan interest rates start from 10% pa, whereas credit cards usually charge more than 40%. A personal loan takes less time than availing of a new credit card. We recommend using a personal loan to travel rather than depending on a credit card.
With personal loans, you can get a good amount of money to start your trip, saving time and money in the long run. Unlike credit cards, personal loans offer instant approvals.
If you want to apply for a personal loan in Delhi, here are some tips:
- Ensure your credit score is high enough when applying for a personal loan. You can check your score online.
- Make sure that you only borrow what will be needed so as not too much burden on yourself later on.
- Compare personal loan interest rates on Loans Jagat to get the best loan offer.
