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Personal Loan or a Credit Card - Which is Better for Travelling?

Personal loan is granted without any security only on the basis of the credibility of the borrower. It is generally used for expenses like weddings, vacations, payment of uninsured bills and renovations. Higher the credit ranking of the borrower, better are his/her chances of getting a personal loan. You are required to pay back the loan by the decided tenure end date. On the other hand, credit card offers you a pre-decided line of credit which you are required to pay back by the end of every month. When you are unable to pay the bill amount, you are charged a specific interest rate on the amount you owe.

Assessing Use of Personal Loan for Travel

Personal loan is an informed way of spending for your holiday, since you are well aware of when you are required to pay the lump sum back. You can divide your travel cost over the entire loan duration, so that it does not burn a hole in your pocket at once. You do not have to pay any fee for advance withdrawals. You can obtain the loan within minutes of application and get the fund deposited in your account within less than a week in most banks.

Gauging Benefits of Credit Card for Travel

Using a credit card in travel eliminates the requirements of carrying extra cash. Moreover, most credit card purchases also offer frequent flier miles, loyalty points and other rewards. Studies also confirm that credit cards usually provide you a better exchange rate than other physical forex booths and banks.

Which is Better?

Credit card is a better option if the money is repaid within a month and if the amount is lower. It is also an interest-free option if the amount is repaid before the due date of the credit card bill. Also, various offers like cashbacks and reward points make it a very attractive option.

However, if the amount is higher and if it needs to be repaid after a longer duration, then a personal loan is a better option as the interest rate on a personal loan is lower than the interest rate on credit cards.

 
 

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