5 Reasons You Should Use a Personal Loan and Not a Credit Card this Season


Ideally, you would have already saved up for your festive shopping, but if you don’t have enough in your savings for all the holiday expenses, you may first think you will use your credit card. However, this might not be the best option, especially if you are already carrying around credit card debt.

A better option might be a short term personal loan and here are the reasons why a personal loan could be the best option for your holiday expenses.

christmas personal loan

You Know What You Will Pay

With a personal loan, you will borrow a fixed amount of money. Once you have been approved for a loan, your interest rate, the period and the repayment terms will not change over the course of the loan.

You are informed beforehand what you will need to pay each month, which will not change. This means you are able to budget for your repayments a lot easier.

With credit cards, on the other hand, if you don’t pay your balance off in full each month, the repayments you need to make can fluctuate and you will need to pay fees on top of this.

The Interest Might Be Lower

Generally, the interest rate that is paid on a personal loan is lower than your credit card rate. This means that you are able to save money in the long run when you opt for a personal loan for your holiday expenses.

It is important that you shop around for a personal loan that has a low rate, in order to make it beneficial.

You Can’t Spend More

With the festive season, there are many expenses to take into consideration like presents, travel, decorations and more. Putting all of these costs onto a credit card can make these expenses even more expensive because of the interest. Also, with a credit card, you can keep spending, paying it back and spending the amount again and so on, which can lead to greater debt.

With a personal loan, you get a fixed lump sum and you are not able to borrow more on top of this. This means you can avoid overspending, but you should only borrow the amount that you need and can afford.

A good idea is to make a budget before you borrow any money and see how much you will need and stick to this.

personal loan

No Surprises

The interest rate and terms of the loan are fixed and they will not change for the period of your holiday loan. You also know what you will need to repay from your household budget each month, so there are no surprises.

You will find credit cards offering 0% interest for a certain period of time, which is tempting and can be a good option for some. However, this will only work if you are able to pay off your total balance in full before the promotional period ends, otherwise, you start to incur interest and possibly other fees.

There is an End

A personal loan is perfect for short-term financing as it has a fixed term, which means you will know exactly when the loan will be paid by and then you are done with the obligation. Whereas with a credit card, you can keep using it, which means you may just keep adding to your debt and not really paying it off.

The best thing to do though is to budget and save throughout the year for Christmas, but if you are in a pinch and need some money then a personal loan could be a good idea for you.