Personal Loans vs. Credit Cards in Guernsey

If you have an unexpected expense, you would normally turn to your credit cards to solve the problem. However, there is another solution.

A personal loan in Guernsey may or may not be the better option than a credit card to solve your financial expense. So here are the facts so you can weigh up the best way to finance your purchase in Guernsey.

What is a Personal Loan?

A personal loan works like any loan that you take out to finance a purchase, e.g. you get a fixed repayment term, a fixed interest rate, and a regular monthly payment. Credit cards are different in that they provide you with a revolving line of credit, i.e. a credit card has a maximum credit limit that you can use as little of, or as much of, as you like and you choose to pay the balance in full each month or pay only the minimum.

Unlike a car loan or motor finance, but like credit cards, a personal loan is unsecured. This means that if you were to default on a personal loan repayments, the bank are unable to come after your car or other property in Guernsey. This is why you will usually need a very good line of credit to get a personal loan.

When is a Guernsey Personal Loan Better than a Credit Card?

Life is full of surprises and sometimes you can be facing a one-time expense that you were not expecting and certainly can’t afford (e.g. £2,000 garage bill), a personal loan will usually have a better interest rate than the rate of your credit card.

Plus when you apply for a personal loan in Guernsey, you will agree your monthly repayment and life of you loan up front. You will know that you are making progress towards paying off your loan each month.

But with credit cards it is really easy to get stuck in the minimum payment loop and never making any progress on paying off your balance.

When is a Credit Card Better?

If your unexpected expense is manageable enough that you will be able to pay it off over a short time with small lump sums then a credit card offering a low or 0% APR on purchases settled within the first 6/12 months is obviously better than a personal loan. You will pay little or no interest and subsequently not incur any further expense. These can be hard to come by as your credit will have to be excellent to qualify.

Beware by using a 0% APR credit card you are running the risk of being landed with high interest debt, Please ensure that you:

• Pay off your scheduled Monthly repayments on time and clear the card within the year.

• Do not apply any further charges onto to the card as this will make clearing it more difficult.

Where to Find a Personal Loan in Guernsey

 Find.gg Loans aims to bring you the best Personal loans and finance deals in Guernsey. Use our online calculator to work out your repayments today and see how much you can save.