Article by Shilpika Ponnappa
There are times when we have to remove our pride and accept that we have to borrow money at some point. Borrowing money is not a bad thing- if you know how to pay your dues. When it comes to borrowing money from a financial institution, there are two options that are very popular. These are credit cards and overdrafts from banks. Both methods are very advantageous since they are flexible and they are great for short term loans. However, we should also look at the disadvantages of such options before you set out and make a loan.
Let us start first with credit cards
- There are no charges whatsoever when you borrow money and pay it before the end of the month.
- If you made a purchase but you found out that it is defective, the payment can be held up by the credit card company until the retailer resolves the issue by providing a replacement or a full return.
- When talking about interest rates, they tend to be higher compared to a Bank Overdraft.
- Nowadays, we see people here and thier screaming credit card fraud. It is a rampant issue and should be addressed speedily.
- If you want to get some cash via credit card, fees are done per transaction no matter how small or big the withdrawn money is.
Now let us look at the Bank Overdraft.
- This kind of loan is advantageous since you can avoid fines or penalties in the bank account. This is because these will be covered by the overdraft.
- This is a very good way to borrow money within several months. In fact, interest rates tend to be lower compared to credit card loans since unlike credit card companies; banks have other ways to earn their money. This includes savings accounts, mortgages as well as payment service.
- The problem with this option is that the overdraft can be called any time the bank wants to. They can ask you to pay the amount at a shorter amount of time, or else, you will be facing them in court. Some even remove your account if you do not pay your debt as soon as possible! .
- The overdraft should be borrowed for a short period only. You must also always pay in full. Otherwise, you will be charged.
- There are no securities for product issues unlike with credit cards.
Before you select the option that you need want to choose, it would be best to be aware of the apparent risks that could occur, if you choose one of them. The best way to handle the issue is to use them sparingly and pay your dues on time, all the time.
About the AuthorShilpika Ponnappa, Get more information on Bank Overdraft Facility, Savings Account Interest Rates
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