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Should I get a credit card or a loan???

Last post Tue, Jun 17 2008, 11:15 AM by RupertPJones. 5 replies.
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  •  Tue, Jun 17 2008, 11:15 AM

    Re: Should I get a credit card or a loan???

    Hens00:

    Instead of getting a standard credit card, why not try a prepaid credit card? They have the benefits of working exactly like a normal credit card, except you need to top up the card before using it. It works like a pay as you go phone and helps you control your spending habits, and of course since you are borrowing no money you are not charged interest. You could take out a loan for 16K and transfer 4 of it to the prepaid card.

    I totally disagree with Hens. You obviously want to get credit - hence the credit card or the loan. I dont see how you would benefit from a prepaid credit card in any way. I think prepaid cards are great but not for everyone and not for every purpose. How would taking out a 16k loan (on which you would be paying interest) and then transferring £4k to a prepaid card which would incur loading and usage fees be beneficial?

    Thats my 2 bits!

    Rupert

    Note: This post has been moderated. Please ensure you read the moneysupermarket.com Community Standards and Terms of Service before posting. Thanks.

    • Post Points: 5
  •  Sat, Jun 14 2008, 7:16 AM

    Re: Should I get a credit card or a loan???

    Instead of getting a standard credit card, why not try a prepaid credit card? They have the benefits of working exactly like a normal credit card, except you need to top up the card before using it. It works like a pay as you go phone and helps you control your spending habits, and of course since you are borrowing no money you are not charged interest. You could take out a loan for 16K and transfer 4 of it to the prepaid card.

    • Post Points: 20
  •  Mon, Jun 09 2008, 3:53 PM

    Re: Should I get a credit card or a loan???

    I would say you should get a loan because if you miss a payment on credit cards banks are more likely to charge you blind. If you can't make a payments on loans there is always many things to resort to like debt consolidation, IVA, or bankruptcy...which you could be able to avoid if you keep your debts in manageable order! Heres a site that tells you about these options in more detail www.anysubject.com/card-credit-debt-eliminate-card-consolidation-credit-debt-elimination.asp

    If you want a less biased approach here are advantages and disadvantages of loans which might be useful

    http://uk.moneto.eu/financing/personal/advantages/

    I believe that I am biased though because when it comes to opening a credit card for me there is more temptation to dig myself into a deeper hold with the debts. Had some serious debt issue a while back and tried the credit card route to paying them off but my debt was to large and then I had fees for the credit cards on top of it. Not a pretty situation. Anyways my advice could be a bit biased thus, but I hope this is of some use for you :)

    Good Luck!

    • Post Points: 5
  •  Mon, Jun 02 2008, 10:57 PM

    Re: Should I get a credit card or a loan???

    Hi Shelley,

    Should you go the credit card route, which is a dubious one, there are a few things you should know with regards to the way balance transfers work.

    1. Don't be fooled by offers for purchase interest rates along with low interest balance transfer rates, this is to get you using the card and building up a balance on it. Most low purchase interest rate offers on credit cards are only for the first 3 months. People fall into the habit of spending on the card during this time, and then once the 3 months is up, you get clobbered with the normal interest rate, forgetting that it only lasted 3 months.

    2. If you do a balance transfer to the credit card, do NOT do anything else with that card, even if the credit card is offering a low purchase interest rate. Use it to just pay off the debt transferred, with the low interest rate offered. As soon as you purchase something on the card, that amount will begin accrueing interest each month until you have cleared off the balance transfer amount, as your monthly payments will pay off the lowest interest rate first!

    3. Be wary of balance transfer fees and minimum spends required to secure the balance transfer rate offered, these are ALWAYS exempt of the balance transfer rate, and begin accrueing interest immediately, and the fee amount will always be kept seperate from the balance transfer amount. Again, all payments made to the credit card will clear off the lowest interest rate first (the balance transfer) and the fee amount will be classed as a seperate balance, accrueing interest at the normal purchase rate on the credit card until the balance transfer amount has been paid off in full. This is how banks make their money on balance transfers. Unless ofcourse you do a balance transfer without a fee, which are very rare.

    Hope this information is helpful :)

    • Post Points: 50
  •  Fri, May 30 2008, 12:36 AM

    Re: Should I get a credit card or a loan???

    There are self explanatory calculators on MS credit card site accessed above and each card has salient point information.

    • Post Points: 5
  •  Thu, May 29 2008, 8:28 PM

    Confused [8-)] Should I get a credit card or a loan???

    Hi,

    I've got a loan with barclays for £12k and want to get an additional £4k loan but not sure what to do.... Should I get another loan and combine both amounts or should I get a credit card and put the £12k on the card and get a limit of £16k for the additional £4k I need..... I'm very confused about the credit cards with the balance transfers and purchase apr!!!!

    I'm changing my loan as the apr is 11.8 and the repayments are £350 a month when I know I can get a loan on a cheaper apr.

    Any help would be great.

    • Post Points: 56