Line of credit or a credit card? What’s right for you?

You may be looking for some additional flexible credit to help you through the financial uncertainty we are facing as a nation. The two most available forms of flexible credit are lines of credits and credit cards. There are a few things to consider when looking at these products, and you shouldn’t rush into either. Always talk to a financial expert at Casera before making any final moves.

Credit Cards

Credit cards are an excellent secure means to pay for things online, in person, or through subscriptions, but they do come with a cost, which can be quite high in some cases. Credit cards are considered high-interest debt as interest is paid on purchases, often in the double digits, and minimum monthly payments are mostly designed to cover the interest and only a small amount of principal. The higher the debt load on a credit card, the higher the interest payments, and the longer it will take to pay off the principal. 

The best use of a credit card is to pay for things you already have the money for, such as earning points, rewards, etc. It’s also the best tool for paying online as there are built-in security features to protect you from fraud.

Lines of Credit

A line of credit is not entirely unlike a credit card, as it provides a flexible account with the ability to spend or pay down the balance on your own schedule, usually at a lower interest rate from a credit card. It cannot be used to make online purchases and is often best used to pay down high-interest debt, make larger purchases, or provide a rainy-day fund of sorts if you don’t have one saved already. 

A line of credit should not be used as ‘free money.’ It is a tool to help stabilize your financial situation in several different ways, as well as post-pandemic. It might be worth considering if you’re facing high-interest debt or other financial uncertainty. 

As always, talk to a financial professional at Casera before making any significant decisions.