Why Are Credit Cards Worse Than Personal Loans?
There always tends to be a certain distaste for taking out personal loans generally because the idea of ever mounting debt takes people out of their comfort zones. People generally prefer to only take out these types of loans when absolutely necessary such as when it comes to starting up a business or at times such as these during the COVID-19 pandemic when it becomes a matter of being able to pay off the ever-increasing bills. The thing is, people tend to only feel comfortable taking out loans from big banks; think TD, Scotiabank, RBC, Bank of Montreal, CIBC, or any other accredited institution. Why? Because people usually feel safer going to something they feel familiar with rather than to something unknown. You might say: "Hey! I already have my mortgage, credit card and bank account linked to this bank, so why should I go with anything different when it comes to my personal loans?". But what if I told you that there was a better way?
Credit Card Stockholm Syndrome
Debt has become so prevalent in our society that nowadays people just accept it as a state of being. New data published by the International Monetary Fund has discovered that Canadian household debt to GDP reached a new record high in the 1st quarter of 2020. It is safe to say that the COVID-19 pandemic hasn’t necessarily made these numbers any better. This clear pattern has been consistent these past years with Canadian household debt growing 49% faster than GDP since 2005. This means that the average Canadian is piling up debt about 1.5X faster than they are accumulating wealth. Out of this rapidly consumer debt on Canadian households, $72,950 now represents the total as of the end of 2019 according to Equifax Canada. This can be subdivided into mortgage and non-mortgage debt. Non-mortgage debt which accounts for credit cards, line of credit and loans accounted for $23,800. This is striking with a study by the U.S Federal Reserve discovering there are 459M credit cards in circulation in the U.S. This translates to the average credit-card owning American possessing 3 credit cards. But why such attraction towards credit cards?
The Caveat to Credit Card Hysteria
Credit cards which are given out by big banks are designed with the buy now, pay more later system which only started to roll out en masse to the public in the 1950s have now become one of the backbones of our economies. This has resulted in immense growth but also with the caveat of instability. The problem with credit cards is the interest rates that pile up when you carry over your balances from month-to-month. These purchase and cash advance interest rates can reach as high as 22% APR. This is the result of not making your repayments full each month which can be especially challenging in financially difficult times.
The increasing interconnectivity and online use being championed with credit cards has also led to credit card fraud which has become an ever-growing issue in the past years. Over the past 10 years, the number of accounts reporting at least one case of credit card fraud has increased by 71% according to the Canadian Bankers Association. Having to then suspend your account and deal with the problems afterwards can be a major hassle.
Finally, major financial institutions are constantly concerned as to whom they’re giving out money to. A good credit score is essential if you want to be accepted for a credit card from your local bank, especially when it comes to credit cards with higher monthly limits. A bad decision or a financial mistake that you may have committed in the past could act as a permanent burden in your future, preventing you from going where you need to go. Maybe that credit card was your chance to get the money you need for that vacation that you have been needing these past years or maybe it’s for an important investment. It doesn’t matter, that’s for you to know, and for us to provide you with that opportunity and peace of mind. In this situation, you may ask how personal loans are any better, let me show you how.
Getting What you Deserve, Spending on Your Life and Investing in the Future
The main differences between personal loans and credit cards are: 1) Credit cards are known as revolving debt whilst personal loans are a fixed debt. 2) Your credit score doesn’t have to be your end all be all as to whether or not you are eligible for a loan. 3) You have greater variety and more options when it comes to personal loans. Let’s take a deeper look.
Personal loans as fixed debts mean you receive a fixed amount of money and you repay it in equal installments over a fixed time period until the maturity date. Personal loans also allow a wider range of people to get accepted for loans than credit cards from banking institutions that require every single detail about your life along with tons of paperwork. The only work you need to do with a personal loan is to go on the company’s website and fill out some quick info in the span of 5 minutes and get the money deposited in your account within 24 hours! If you’re looking for a quick personal loan, whether that be $500 or $20,000, you can find what you’re looking for with Magical Credit.
Magical Credit - Making Borrowing Simple
Magical Credit is a bad credit loan provider to those who aren’t able to receive the funds they need from their traditional banking institutions. At Magical Credit, we don’t give out loans that we don’t think you can pay back and we’re here for you even if Canada’s banks and payday loan companies don’t fit your needs. Choosing a personal loan allows you to save on interest rates while also getting the money you need fast. Here at Magical Credit, we offer you a wide range of repayment options with the period of time ranging from 6 months to 60 months. Whether that is to pay the bills, finance a divorce, pay legal fees, an unemployment loan or something else, it doesn’t matter.
The website offers a calculator to calculate your repayment amount per payment period depending on the amount you borrow and the repayment period you choose on the front page. Magical Credit also accepts non-traditional sources of income such as unemployment insurance, workers leave, maternity leave, pensions and more. For peace of mind and an easy way out, go to https://www.magicalcredit.ca/ today to learn more!