Why a Short Term Installment Loan is Better Than A Credit Card
The main reason a short term installment loan is better than a credit card is the interest that you will pay. With a short term installment loan you have monthly payments same as a credit card, but the loan is working on your principal along with the interest. If you look at a credit card statement and your interest is $45.00 and your monthly minimum payment is only $50.00, then only $5.00 of that payment is going towards the principal. With a short term installment loan you may have the same monthly payment of $50.00 and a beginning principal reduction of the same $5.00, but as your installment loan progresses the insterest goes down and the amount applied to the principal goes up. With the short term installment loan you have a set amount of interest that is charged on the total of the loan, but with a credit card the interest is charged monthly on the outstanding balance.
Credit card companies are in the business to make a profit. Last year they made a higher profit than Wal-Mart, McDonalds and Microsoft combined. This tells you that they are charging a lot of interest. After all is said and done you will have your short term installment loan paid off in the set amount of months agreed on. With the credit card you can be paying on a $1000.00 loan for many years, some cards it may take five to ten years to pay off the debt. Credit cards should only be used if you have the money in the bank to cover the charge and can pay it off right away. Do not use a credit card for any large purchases that you can not afford and only plan to make the minimum payment. You will never see the end.
