Loans and credit cards are both third-party means to finance any expense, whether personal or business. However, while the two involve borrowing funds, there are distinct differences in how they work. Understanding their distinctions will help you decide which credit option offers the most advantages for your financial situation.
In this article, we’re highlighting three differences between a loan and a credit card:
– Credit cards issue you funds through a card, a loan doesn’t.
A credit card gives you the convenience of spending your funds from anywhere you are. This is because all you need to access the funds is your credit card. For a typical loan, the funds are usually credited to your bank account and may need to be withdrawn from your bank.
– Loans are given in lump sum, credit card involves revolving credit. A loan is usually given as one single sum. This means if you apply for a loan sum of N500,000, you will receive that sum and are expected to pay back at the set date. On the other hand, a credit card comes with a preset credit balance from which you can spend. However, your credit balance does not run out like a loan, instead, your card will be replenished with more credit once you have repaid a specific percentage of the used credit by an agreed date.
– Loans require re-application, Credit cards do not. Once a loan has been issued to you. You are required to apply all over again if you need another loan, and in most cases, you can only apply after you have completely paid back all outstanding debt. On the flip side, you only apply for a credit card once. After that, all you need to do is to pay back only a percentage of your used credit, and then your credit card balance will be refilled.
Which is Better Between a Loan and Credit Card?
While both options can serve different uses, if you’re looking for a flexible financing option to meet everyday needs or domestic business needs, then a credit card like O3 Cards offers you better advantages:
– No bank restrictions
– No collateral required
– Special discounts and deals for card users
– Up ₦2,000,000 in credit card limit
– Application is simple and fully online
Got needs to meet? O3 card is at your service.