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Is It Better to Have a Credit Card or a Loan?

Is It Better to Have a Credit Card or a Loan?

Deciding what loan is right for you

Unexpected bills can come in many different shapes and sizes; a small vet bill to get your pet some much-needed treatment, a back-billed tax statement or even a costly car repair to keep yourself on the road. They are unpredictable and unwarranted, and often leave us in less than ideal situations – in fact, many of us simply won’t have the available funds when we need them.

When these bills and costs hit, they must be taken care of immediately to avoid racking up additional charges or late payment fees, which is why so many people choose to take out loans, credit cards or advances. The problem is that there’s just too much selection, and sometimes it’s difficult to know exactly what product might be best for you.

It helps to know how some financial products can be more beneficial than others in certain situations. Whenever you make any financial decision, you should consider all options before making an informed selection, to make sure that you save money in the long run without incurring any additional fees.

This article will outline the pros and cons of a few different lending types, and how they may be able to help you over other, similar products.

Credit Cards

One of the most common forms of credit comes in the shape of a small, colourful plastic rectangle. Most Brits have their own credit card or are named as a card holder on someone else’s account, usually due to opportune marketing techniques utilised both online and through the post.

Credit cards aren’t always issued by the bank; they can also be store cards used to build up a bank of ‘points’ redeemable for in store discounts – they can be genuinely helpful, allowing users to save a significant amount of money, though they can also make it easy for the user to fall into several thousand pounds worth of debt.

The main appeal of a credit card is that it can be used anywhere, at any time. There are usually no restrictions on what you can purchase, provided you maintain your card within the assigned credit limit and make (at the very least) your minimum payment by the due date every month.

Credit cards can be a good way to build up a credit score, as they are often easy to obtain via a ‘pre-selection’ process – users should be aware that this can be a predatory form of marketing designed to make the company money.

Banks make money from credit cards by charging you interest on your payments – they anticipate that an average user will buy something large and pay it off in installments, allowing the lender to charge a large amount of interest every month. The interest rate does vary from lender to lender, so it’s strongly advised to understand exactly what your credit card fees are and how they work.

Pros and Cons

One great reason to use a credit card is that purchases will generally only start to accrue interest after your statement due date each month. Provided you pay your full credit card balance by the statement date every single month, the interest you pay will be minimal to none, making it a good idea if you know you can quickly clear the balance.


Can be used anywhere
Great way to build a credit score
Can be cleared and reused at any time


Banks may charge late payment
Interest rates can be high
Easy to overspend when you know the money is available
Credit limits can often be ‘too’ high
Card applications can take a while to process

A Payday Loan

Payday loans are also an incredibly popular type of lending, advertised as being a type of short term loan to help out with unexpected costs. They usually require minimal credit checks, making them a great, easily accessible form of credit.

Payday loans are typically credited to your account within very short timescales; if you apply through Loan Bird, you may even have access to the funds in as soon as 10 minutes! They can be a widely varied amount, suitable for a wide range of applications, though they should be paid off in full within a month.

Whilst payday loans can be incredibly useful, they usually have much higher interest rates than other types of lending. This is because they are short term loans, and as such, must be cleared in a timely manner. Failure to repay a payday loan by the due date can incur large fees – you should never take one out unless you know that you can clear it in full by your next paycheck.


Easy application
Quick payment
No credit checks or soft credit checks are used


High interest rates
Short term loans

Short Term Loans Bad Credit

Low interest, quick loans don’t exist for those of us with a less than perfect credit score, which is where a short term bad credit loan can come in handy. It’s a higher interest form of credit quickly granted without the need for an in-depth credit check. They can be incredibly useful to help build up a credit score, especially if you aren’t eligible for other forms of borrowing, and may even have a longer payment schedule than a payday loan.

Loan Bird can offer lenders who entertain bad credit loans. Our service will tell you if you’re likely to get a loan before a credit check. So, if you are interested in taking out credit but you’re worried about your credit score, it might be a good place to start:

As there is no credit check, you may find the interest is higher than other lending products. An aside of this is that the payment schedule is usually a lot more negotiable than other short term lending products. A bad credit loan can comfortably bridge the gaps between needing money instantly, a low credit score and the possibility that you won’t be able to pay it back by your next pay cheque.


Easy application
No credit check required
Can be used to build up a credit score


High interest rate
May include fees

Obviously you should thoroughly look into every possibility before you take out any form of credit, but hopefully this has helped to show you the benefits of different common lending options. It’s important to note that this is not intended to be advice on what type of loan to take out; just a guideline on what options are available.

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