Pandemic Pera Problems: Should You Apply for a Salary Loan or a Credit Card?

Dec 1, 2020

During this pandemic, we encountered so many problems in so many aspects of life. Among all of them, one thing that we felt so strongly are our financial issues.

Now, when you are in need for some money, there are two financial solutions that come to mind first. For quick cash needs, salary loans and credit cards are most accessible. But if you can only go for one of these options, which one would you pick?

An Overview of Quick Borrowing

If you are in any means trying to borrow money, whether from financial institutions or from individuals, one thing you should think about is your capacity to pay people back. As salary loans and credit cards are easier to access, they usually come with more expensive interest rates. Admittedly, beggars cannot be choosers, but you should ensure that you are ready for the journey of repayment and that you will be responsible throughout.

Borrowing money is a solution that can help you get back up after a pandemic. But remember to always manage it properly. Once you get approval and you have the money on your hands, don’t lose your way. Remember what you have allotted the funds for, because messing it all up is a sure way to encounter some financial troubles.

Now, let’s look at salary loans and credit cards, the best part about each, and the things you should know before you start an application.

A Quick Look at Credit Cards

A credit card is a way for traditional institutions to give you an access to revolving credit. Basically, this means that you are allowed to borrow money at any time you want for whatever purpose it may bring you. However, they will set limits and payment deadlines. Depending on your consumption, you have to settle everything in installments for a predetermined amount of time.

Generally, the rule is to only purchase using credit cards for those expenses that you can easily pay off quickly. Because, failure to do so would mean being stuck in an endless loop of fees and interest charges. The key to make the most of this revolving credit line is to practice proper credit card management techniques.

Advantages of Choosing Credit Cards

  1. Credit cards make purchases easier. – Especially at a time of a pandemic, people shifted their shopping behavior from physical stores to online marketplaces. Through credit cards, ecommerce payments are easily done with just a few clicks.
  2. Credit cards are usually accessible to most people. – Unlike other forms of borrowing, credit cards are practically available to anyone. Usually, all it takes is to have a savings account in a bank for about a year and your bank will automatically send you one. Starter credit cards, those with higher interest rates and smaller credit limits, are easy to apply for as long as you have a regular job, you’re good to go.
  3. Credit cards have little impact on your credit score. – If you apply for a credit card, get approved, and regularly make payments, this choice will have minimal impact on your credit score. The only time you have to worry is when you fail to make your payments.

Disadvantages of Credit Cards

  1. It can be easy to overspend. – As great and convenient credit cards are, the ease of usage it brings unnecessary spending, especially if you are not disciplined enough. Without money management principles guiding you on, the wants vs your needs might come to haunt you later on.
  2. Credit cards usually come with fees. – If you’re still building up your credit, your card will usually come with annual fees and most likely, this will amount to a few thousands of pesos, which you could’ve spent elsewhere.

A Quick Look at Salary Loans

A salary loan is a type of unsecured loan that gives people a certain amount of money, usually amounting to one month’s worth of their salary. This type of loan is ideal for emergencies like medical costs, repairs, unexpected bills, and similar expenses. Overall, a salary loan can be a great financial lifeline and it can help you begin again and stay on your toes, as long as you manage it right.

Advantages of Salary Loan

  1. Salary loans provide instant cash. – Most salary loans allow quick approval, usually within 24 hours. A majority of platforms transfer the amount straight to your bank account for quick and easy access.
  2. Salary loans are more difficult to spend on unnecessary things. – Because salary loans are non-revolving in nature, you will not be tempted to spend frivolously. Taking out a loan like this will usually serve its main purpose.
  3. Salary loans allow you to have a standard payment schedule. – In comparison to credit cards where the loan you consume can vary each month, salary loans stick to a specific amount and are much easier to manage. You know how much you have to prepare each month, so this is a perfect way to train and discipline yourself to be more responsible amount money.

Disadvantages of Salary Loans

  1. Salary loans can be expensive if you don’t pay on time. – Because salary loans are easy to approve, failure to pay for them can hurt you quite hard. They usually come with an array of fees and charges if your loan defaults, and you wouldn’t want those unnecessary expenses mess up your life.

Final Thoughts

There are many ways to help yourself recover against financial crisis, especially as we are still in the midst of a pandemic. Credit cards and salary loans can be a great choice for anyone in immediate need of funds.

To start, you can consider the Salary Loan if you belong to one of our partner companies. In our P2P platform, there are several choices you can go with, like Fast Loan and Personal Loan, so you can check them out to. Learn more about how we help Filipinos survive and thrive, even during the pandemic, and how you can be a part of the family.