Are Credit Card Loans Too Good to Be True?

Fast and easy cash is the name of the credit card companies’ game, and credit card loans are no different. But behind the advertising and allure of quick cash, are they really the best option for consumers?

Credit cards may just be up there as one of the greatest inventions of all time for many people; there are few of us who can resist flashing that plastic. Suddenly, nothing is beyond your purchasing power – and even emergency and surprise expenses are easy to deal with, rather than a huge headache.

Beyond this easy consumerism, however, credit card companies are only too aware of the American weakness for credit. Now, they’re offering loans that are very easy to get – but before you jump on these loans, you might just want to ask yourself whether they are too good to be true.

On the face of it, they seem like a great option: the more kinds of credit you have, the better your credit scores could potentially be – and surely a credit card loan is just one of those many forms?

Not quite.

Credit Card Loans Might Be Fast – But They Offer Few Benefits

These loans – sometimes called “flexible financing” are not recorded as loan payments, but rather credit card payments. In other words, these won’t contribute to your credit rating at all, giving you no benefit on that front.

It’s also worth knowing that unlike credit cards themselves, the loans don’t come with any of the bonuses that make credit cards so attractive. There are no cash back initiatives, no air miles, and no points. Yet despite having fewer benefits, you still have all the responsibilities of a credit card – which means remembering your limits and staying under them… or paying the eye-watering fees.

As great as these loans might look on the face of it, they offer few benefits and can even impact on your credit score in the future. If you want to take out a loan, you should think carefully and look at your options.

Are There Better Alternatives to Credit Card Loans Out There?

Whenever you’re considering taking out a loan, it’s worth looking at all the options you have – here are two of the most popular in the United States today:

Personal Loans

Personal loans are what most people typically take out when they need extra money. These generally offer lower interest rates and are an attractive option for people with a high credit score since they can give you a boost – especially if you take out multiple personal loans and pay them off on time.

0% APR Credit Cards

Interest-free credit cards are essentially a loan without interest, which can save you hundreds of dollars. What’s more, unlike credit card loans, you’ll also enjoy the bonuses that come with your credit card, such as air miles. However, you will need to keep an eye on your balance as well as read the small print.

Credit card loans might be the talk of the town right now, but don’t let the glossy ads fool you. The reality is that they simply aren’t the best option for many people, and don’t offer the flexibility or rewards that you can get elsewhere.

With the negatives outweighing the “easy cash” positives, it seems that for now, most will be better of going through more traditional routes to get the loan they need.

37 views0 comments